1People's Democratic Republic of Algeria, Ministry of Higher Education and Scientific Research, Abou Bakr Belkaid, University of Tlemcen, Faculty of Economics, Management and Commerce, THESIS IN MANAGEMENT SCIENCES, OPPORTUNITY: MARKETING, Topic: Analysis of the Key Factors Driving Innovation in SMEs , Case of Algerian Companies Presented by: Mrs BERBAR, nee BERRACHED Wafaa. Under the leadership of: pastor BENHABIB Abderrezzak. MEMBERS OF THE JURY. President: Supervisors: Examiners: Prof. Dr. BENBOUZIANE Mohamed University of Tlemcen. Prof. BENHABIB Abderrezzak University of Tlemcen. Prof. BOURAHLA Allal University of Sidi Bel Abbés Prof. Dr. SALEM Abdelaziz University of Oran Prof. REGUIG-ISSAD Driss University of Oran Prof. Dr. MALIKI Samir Bahaa Edine University of Tlemcen Academic year:

2Acknowledgments Let's not say that "Ink on a piece of paper may not express the best feelings, but it can still leave an indelible testimony." I would like to thank ALLAH, through whom all things are possible, who has given me health, courage and will to finish this humble work, hoping to live up to expectations and win their trust, because I may have become what I am Today. I would like to express my gratitude to my research supervisor, Professor BENHABIB.A, for the help and encouragement he gave me during the development of my studies. His support, sense of expertise, advice and availability made my work rewarding and enjoyable. May he find in this work a living tribute to his sublime personality.

3General introduction

4General Introduction “There is nothing more difficult to tackle, more dangerous to master or more uncertain than to participate in the establishment of a new order of things, for innovation makes enemies of all those who have passed and succeeded under previous circumstances. "As lukewarm defenders all who can succeed in the new order." Nicholas Machiavelli (1515). "Systematic innovation requires a willingness to see change as an opportunity." Peter Drucker "Innovation is a situation you choose because you have a burning passion for something." Steve Jobs 1

5General Introduction General Introduction After the industrial age, today's so-called developed countries have experienced an enthusiasm, even frenzy, for technological development and innovation. In a world characterized by competitive dynamics, innovation has become an important strategic theme for companies. The globalization of markets and the increasing openness of economies are changing the conditions of competition and forcing companies to change the basis of their competitiveness and financial performance. In other words, a large part of small and medium-sized enterprises face these challenges and must offer competitive goods and services through different production techniques. The demands of globalization, which have reduced the competitive advantages of companies, mainly based on cost reduction and control of production chains around standardized products, the rapid changes in production technologies and the ever-changing demands and sophistication of consumers, have made the innovation process more complex and the possible outcomes more uncertain (Griffin 1997, Keizer et al. 2005) 1. Innovation has therefore been the subject of various considerations and theoretical and empirical research. J. Schumpeter is credited with the fatherhood of many ideas, although other economists have sometimes taken up the issue of innovation. Nevertheless, he is still one of the most important references in the field of innovation and economic dynamics2, where he presented innovation or the new combination as the main source of economic growth, which Nelson and Winter 1982, Teece 1986, Dosi 1988, Freeman 1992 consider as Be evolutionists. innovation due to their pioneering work as a complex interactive process as opposed to the orthodox theory that describes the linear and sequential model of innovation. Other studies have emerged, such as institutionalist theories, the school of innovative environments, and the school of learning. Competition is critical to the success or failure of businesses. It penalizes a company's activities that contribute to its performance, such as innovation. A particular technique is said to be a scientific way of solving a problem. 4. In fact, innovation was seen as a technical progress that gave it an exogenous character and a linear character. The innovation process and in this context research and development was the only source of innovation. Innovation. But in the 1940s, the idea of ‚Äč‚Äčinnovation took on a new dimension, the company became the place for innovation and the entrepreneur the actual initiator 5. For companies, innovation was no longer a problem, but their problem. In fact, competition must inevitably wipe out the profits of companies that fail to innovate. Innovation is therefore central to the company's survival. Research, Invention and Innovation", Economica edition, 1998, P Porter.M "Competitive advantage, how to get ahead of your competitors and stay ahead", DUNOD edition, Paris 1999, p. 11 4 Amendola and Gaffard, "The Economic Dynamics of Innovation", Economica edition, 1988, p. 134 5 Gueguen Gael, "Entrepreneurial team and survival of the created firm: a longitudinal analysis", Entrepreneurship Review, De Boeck edition, April 2014, p. 101. 2

6General Introduction Innovation in business strategy is now the subject of broad consensus in management science. Strategic management research has thus shown how important the company's ability to bring a continuous stream of new products to market is for the company's survival (Porter, 1983; Peters & Waterman, 1983; Wheelwright & Clark, 1992; Hamel & Prahalad, 1995). ; Nonaka and Takeuchi, 1995; Brown & Eisenhardt, 1998). Although the failure rate of new products remains extremely high 6 , innovation seems to be the only way the company has to sustainably survive the creative destruction process theorized by J. Schumpeter 7 . We therefore agree with Freeman & Soete when they state that despite the risks, "no innovation dies"8. Innovation provides two basic advantages9: 1. The ability to generate rents linked to the monopoly situation, which temporarily protects the company from a price war. 2. The ability to influence the future of the industry by setting the pace of innovation (Hamel & Prahalad, 1995; Brown & Eisenhardt, 1998), developing new skills and influencing new technical solutions and standards to create barriers to entry (Cusumano). & Rosenbloom, 1987; Lieberman & Montgomery, 1988; Shapiro & Varian, 1999). In the 1980s, globalization led to a development of the economy, increasingly characterized by the spread of ICT (information and communication technology) and the restructuring of companies into new forms. The innovation then leaves the technical framework designed in the laboratories and falls into a wider field. It is based on the mastery of knowledge based on different types of learning (scientific, technical and organizational) acquired both inside and outside the company. Various forms of experimental and applied research and development are gradually being introduced in developing countries, recognizing the interest and need to introduce a culture of innovation, and many authors continue to confirm this. It doesn't matter if you are a beginner. Regardless of whether it is a large company or a large company, the challenge is the same: innovate or give up'. products and services. To meet these new challenges, companies are looking for new approaches to their innovation strategies and processes. Several countries such as India, Taiwan and Thailand have opted for ICT adaptation and production, productivity and gross product seem to grow faster, other emerging countries mainly thanks to a 6 Bessiere V., Gomes-Breysse.M , Gonnard.S, Messaghem K. and Sammut S., "Innovation support: review of ten years of experience", Review Entreprendre et Innover, edition De Boeck, N 21-22, July 2014, p. 53. 7 Remember that for Schumpeter (1951) "the basic impulse , which start and keep the capitalist machine going, are provided by the new consumer objects, the new methods of production and transportation, the new markets, the new kinds of consumer goods. which] ceaselessly revolutionize the economic structure from within, constantly destroying old elements and constantly creating new. This process of creative destruction is the fundamental fact of capitalism: this is capitalism after all, and every capitalist enterprise must deliberately adapt to it" (Schumpeter, 1947, p. ) 8 Guilhon Bernard, "Development strategies based on the knowledge-based economy: possibilities and contradictions ", Overview which development strategies for Maghreb countries, PS2D perspective strategies and sustainable development, Tunisia 2011, S. Fayolle A., Le Loarne Lemaire S. da Maalaoui Adnan, "Entrepreneurship in diversity, yes. But what diversity are we talking about?‚ÄĚ Magasin Entreprendre & Innovation, issue De Boeck, N 20 April 2014, P Amidon.D.M, "Innovation and knowledge management", Organization number, 200, P104. 3

7General introduction The increasing use of knowledge and innovation in all economic and social areas has been observed in Finland, Brazil, Portugal and Malaysia. This conclusion explains the interest and importance now attached to R&D activities and increasingly to innovation in developed and emerging countries. 11 The OECD also concluded that technological progress and innovation accounted for almost half of growth in most countries in the 1990s. So their influence has increased over the years. It should also be noted that innovation has become the norm: SMEs (small and medium-sized enterprises), large enterprises, regions, states, public and private bodies will be required by enterprises and individuals, etc. to innovate. Innovations are represented by new and improved products, new production processes, new organizational forms. They consist of applying technology to new areas, discovering new resources and opening new markets. The need for innovation for companies is no longer measurable, given the ever-shortening lifespan of products and the ever-harder and less predictable competition. The lack of innovation, whether small or radical, means a refusal to adapt to increased customer demands and to submit to the norms imposed by the new global economic environment. As a result, national, regional and international policy makers are multiplying incentives and programs aimed at creating innovation and removing the barriers to its development. With this in mind, in March 2000 the European Council launched the Lisbon Strategy to close the gap between the countries of the European Union in terms of economic performance, competitiveness and innovation, especially with the United States. and Japan. The aim is "to give the EU the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth accompanied by a quantitative and qualitative improvement of employment and greater social cohesion" 13 In Algeria The context is This innovation is not contemporary, for if we look back a little in Algeria's economic history, we see that since the late 1980s the public enterprise has actually given the R&D function a place in its structure. Some companies tried to incorporate innovation into their development process from the mid-1980s. Recognizing that innovation and technology are decisive factors for competitiveness, an Eastern Regional Economic Observatory (OREE) was established in 1994 by a group of public and private enterprises, and a technology monitoring structure was established by the National Computer System Enterprises (ENSI). However, what is striking, according to several authors, is the almost general inability to translate research efforts into development efforts. 14 Despite its managerial status, R&D is still rooted more in organizational charts than in facts. "Small Businesses, R&D.", Technology and Innovation", technovation, Vol. 18, N 1, UK, Vaterlaus.S et al, in collaboration with BAK Basel Economics, Schoder Thomas & al "Innovation and the Impact of Regulations", Plaut Economics, Olten/Bale September 2007, P02 13 Schmitt Christophe and Husson Julien, "From workshop to intermediary: changing the perspective on support", Entreprendre et Innover magazine, July 2014, N 21-22, P Djeflat A "Research and development and technological dominance in the Maghreb: the sources of the blockade", Cahier du CREAD N 29, 1st quarter 1992, P Khelfaoui H "Science in Africa at the beginning of the 21st century: science in Algeria, part 1: institutions", Institute for Development Research IRD France, European Commission, French Ministry of Foreign Affairs, 21 December

8General introduction In Algeria, the law from August introduced a five-year plan for the development of scientific and technological research ( ). This law represents a real turning point and a major break with previous practice in scientific and technological planning17. We agree that the five-year law and the numerous accompanying measures, with the exception of larger budgets, have not yet brought significant improvements, even if they are far from the projections. 18. Newly established institutions such as the National Agency for Valorization of Research and Technology Development Results (ANVREDET) have not been able to meet industry expectations in terms of innovation due to the weakness of scientific production and research in universities and research centers 19. A of the pillars of this strategy is the policy in favor of small and medium-sized enterprises (SMEs), with the aim of creating favorable conditions for their creation and growth. At the beginning of 2013, Algeria employed about 1.7 million SMEs. According to the Ministry of Industry, SMEs and Investment Promotion, the number of SMEs has more than doubled in recent years. They would now make up 94% of the national corporate structure and generate 52% of total private sector non-hydrocarbon output and nearly 35% of the economy's value added. In any case, in Algeria there are only 15 SMEs per per capita, compared to an average of 50 to 60 per inhabitant in the emerging countries. The National Advisory Council for the Promotion of SMEs also reports an early mortality rate for SMEs of nearly 20%. During 2012 up to and including the 1st quarter, more than 2,423 SMEs would have disappeared. Bolstered by large public infrastructure projects since the 2000s, private companies are primarily focused on service activities and construction and secondarily on industrial production (food, wood and paper). In recent years, only 10% of SMEs created were manufacturing companies. SMEs can thus make an important contribution to accelerating long-term economic growth and are a source of new jobs and innovations. In this context, we begin the context of our analysis with a series of stylized facts about the history of SMEs in Algeria and the development of the Algerian innovation policy. We then present the general problems in our work, the aims, the methodological approach and the analysis tools used. Finally, this introductory part concludes with a brief presentation of the chapters. Innovation has a strategic dimension because it determines the company's ability to outperform its competitors and maintain its place in local, regional and international markets 20. Innovation enables the company to counter threats by turning them into opportunities, and also enables to improve the competitiveness of companies 21. The weight of innovation in the economy is undeniable, scientific research and technological development, Djeflat A, "Institutional changes and regimes of scientific and technological accumulation: what affects the European Mediterranean?" Article published on the Internet within the framework of the International Congress "Mediterranean Economy in the Arab World" in Sousse, Tunisia, Ministry of Higher Education and Scientific Research, "Evaluation and prospects for scientific research activities", February Khelfaoui H, "The integration of science in the Development"., North African experiences", Verlag ADEES-PUBLISUD, Paris, 2006, P Boly V, "Innovation engineering, organization and methodology of innovative companies", edition LAVOISIER, 2004, p. 21 21 Soparnot R. da Stevens E ., "Management of Innovation", DUNOD edition, Paris, 2007, p. 45 5

9General introduction, reflected at company and country level by an increasing focus on the determinants of innovation activities. However, not all companies are innovative, and not all countries have established effective innovation systems. in Algeria (Khalfaoui.H1997, 1999, 2001; Djeflat A, 2004, 2006, 2007; Yachir F, 1983, 1992; Arabi K,). Indeed, the global climate remains unfavorable to entrepreneurship and innovation, both from an economic and institutional perspective, at a time when innovation is a key element of the new paradigm of global competitiveness23. This explains why the Algerian company does not care about innovation, the company is obliged to innovate to cope with the fierce competition, not only to penetrate the international market, but above all to increase its market share at national or local level. Since the early 1990s, Algeria has striven to integrate the globalized market by initiating the transition to a market economy and today intends to join the WTO and consolidate its participation in the Barcelona process through an association agreement to be signed with The European Union. This opening movement weighs like a compulsion for the Algerian company, which until then had been shielded from the competition. These accumulated innovation delays arouse our curiosity to understand the origin of this situation24. For this reason, we note that SMEs as a strategic instrument of economic policy have received increasing attention from researchers in recent years. Whether in developing countries or highly industrialized economies, the economic weight of SMEs is recognized and well established. Compared to the numerous works on the relationship between technical change, institutions and economic performance, as well as between innovation and geographical location, our study provides an analysis of innovation from a systemic perspective, where different actors (companies, states, municipalities, financing companies) ) are networked, and innovation brings together determinants that go far enough beyond the realm of science and technology in the narrow sense 25. In general, two types of approaches are distinguished in the analysis of innovation: a microeconomic approach (focusing on business innovation) and a macroeconomic approach ( focus on institutions, i.e. the national innovation system). However, our approach takes into account the microeconomic level and the macroeconomic level by including several variables (internal and external) that can explain the innovative behavior of organizations. Given the characteristics of the Algerian economy (economy in transition, dysfunctional national innovation system, low innovation capacity), it seemed fundamental to us to adopt an approach that does not reduce the determinants of innovation to strategic decisions, technical design tasks and research, as well as development and project management practices . However, it must be emphasized that understanding innovation requires multiple approaches, as outlined by Schumpeter and more recently by evolutionary and institutionalist theories. 22 Ait Otmane F, "Test analyzes the determinants of innovation in the Algerian economy", BEJAIA University, 2011, P Djeflat A, "Knowledge and knowledge, the basis of a new growth regime: what prospects for Algeria and the Maghreb?", Communication at an international conference Oran, 1 June Amable B., Barré R. and Boyer R., "Systems of innovation in the age of globalization", Economica edition, 1997, P Djeflat A., Opcit,

10General introduction: Innovation is also characterized by its collective aspects; it includes a wide range of actors who participate actively in the development of innovations. Therefore, we prefer a study of the determinants of innovation that takes into account the organizational, institutional and geographical aspects of innovation activities. In addition, some studies clearly show that innovative SMEs perform better than non-innovative or weakly innovative SMEs. According to a study by St-Pierre and Mathieu 26 highly innovative companies achieved a growth rate of 20.7% in three years compared to 9.8% for SMEs with little or no innovation. Much research has been done in recent years to understand the innovation behavior of SMEs and to develop tools to increase their competitiveness and productivity. However, few studies have directly examined the innovative capacity of such firms. In other words, the question of whether SMEs have the critical conditions for innovation has rarely been addressed in the literature. Since innovation is the main challenge for SMEs and these companies must master all aspects to ensure the success of their activities, this deserves some attention. Therefore, our empirical research will try to better understand the driving forces behind innovation in the specific context of SMEs. In this perspective, our research aims to understand and determine the key factors driving innovation activity in Algerian SMEs. We are interested in the following issue: which critical factors affect innovation readiness in Algeria? SMEs? To answer our problem, we formulated the following hypotheses. The validation of these hypotheses obviously depends on the analysis that will be carried out later and on a study of a sample of Algerian SMEs. H1a: The entrepreneur is the initiator or center of the innovation process in the SME context. Several articles emphasize that SMEs only want to innovate if they are led by a senior manager who is able to develop a clear vision for the company and a strategy to achieve this vision. Several authors have shown that the entrepreneur is a decisive and very important factor for the emergence of innovations, as he initiates and communicates innovation projects to all employees in general and in SMEs in particular. (Kraft, 1989; Gagnon and Toulouse, 1993; Karlsson and Olsson, 1998; Hoffman, 1998; Rothwell, 1991; Dodgson and Rothwell, 1991; Lipparini and Sobrero, 1994; Young and Brouwer, Bougrain and Haude, 2009; 2009; 2002). Harbone and Johne, 2003; St-Pierre and Mathieu, 2003; De Jong and Den Hartog, 2003; Lee and Chang, 2006; O Regan, 2006; Bencheikh et al.; Ghobadian and Sims, 2006; Lebeau and Vinals 2006; O 'Regan and Ghobadian, 2007; St. Pierre and Trepanier, 2007; Jean Claude Boldrini, 2008; 26 St. pierre.j and Mathieu.C, "Product Innovation in SME Manufacturing; Organization, Success Factor and Performance", Research Report submitted to Department of Finance, Economy and Research, Canada, 2003, p. 15. 7

11General introduction Eliane Olga, 2009; Asmaa Ghalbouni, 2010; Florence le Brie et al., 2010; Safoulanitou 2013, Michel Bundock 2013). H1b: The more the entrepreneur focuses on research and development, the greater the chance for innovations. Although several authors believe that the entrepreneur is a crucial determinant and center of the innovation process, his focus on research and development activities cannot positively affect the likelihood of innovations. We are innovative, and we know well that research and development are the cornerstone of innovation. Our hypothesis has been confirmed by several authors (Bencheikh et al. 2006, Olga B. et al., 2008, Norrin Halilem and Etienne St Jean 2011, Djeflat A. 2012) H2a: The more employees with skills the company has, the more its ability to drive innovation. Several authors confirm that well-educated, technically trained and highly experienced employees with diverse backgrounds are an important factor in stimulating innovation. This is also justified by the fact that several SMEs often state the lack of qualified personnel as one of the biggest obstacles to their innovation activities. (Koeller, 1996; Shefer and Frenkel 1998; Jong and Brouwer, 1999; Hamdani, 2000; Hadjimanolis, 2000; Koschatzky et al., 2001; Romijn and Albaladejo 2002; Freel, 2003; Guangzhou et al., 2002). 2006; St Pierre and Trépanier, 2007; Richard Soparnot, 2007; Jean Claude Boldrini, 2008; Vega Jurado et al.; Frenza et al., 2009; Norrin Hallilem and Etienne St-Jean, 2009; Florence le Brie et al., 2010 Asmaa Ghalbouni, 2010 Jean Chiristope, 2012 Rahmouni, 2012 (Debla Faleh and Souleh Samah, 2012; Michel Bundock, 2013; INSEE 2013) H2b: HR in terms of boosting innovation in research and developing employees who drive innovation in research and development SMEs In fact, human resources play an important role as a key factor in the ability of companies to innovate, but their involvement in research and development activities enables them to be fruitful and create and promote the basis of innovation. Various authors have confirmed , that there is a positive correlation between employees' R&D orientation and the likelihood of innovation. To be innovative, the firm must articulate its internal knowledge bases in R&D activities, which are considered one of many inputs to the innovation process in SMEs. (Adams 2006, Bencheikh et al., 2006, Mehdi Rhaiem 2010, Mairesse and Mohnen 2011) H3a: The availability of financial resources increases the ability of SMEs to innovate: Several authors argue that financial autonomy and profitability increase the likelihood of investments , internally To conduct research and development and thus produce innovations internally instead of importing them. (De Jong and Brouwer, 1999; Galende and De la Fuente, 2003; St Pierre and Trépanier, 2007; Greiger and Cashen, 2002; Romijn et al., 2002; Galende et al., 2003; Bouacida et al., 2005; Jean Claude Boldrini, 2008; Vega Jurado et al., 2008; Eliane Olga, 2009; Frenza et al., 2009; Flaurence le Brie et al., 2010; Michel Bundock, 2013 ) H3b: the company allocated a specific budget Research and development are more likely to generate innovations Margé that several authors have confirmed that the financial performance of companies is a fundamental factor in the ability of companies to innovate, but several authors also confirm that the company must have a specific budget for research and development. This explains why investments in companies' R&D activities make an important contribution8

12General introduction to many types of innovation (Mairesse and Mohnen 2005, Griffith et al. 2006, INSEE 2013). H4a: The company that acts in an integrated manner (partnership) has a great influence on its innovation ability. Several studies have shown that being part of a network significantly increases a company's ability to innovate. In the specific case of SMEs with limited resources, these collaborative networks are of great importance as they enable them to fill their gaps in terms of resources, skills and knowledge. It can thus be assumed that the ability to cooperate with the external environment is a key factor for the speed of innovation in the company. (Jong and Brouwer, 1999; Freel, 2000; Landry and Amara, 2002; Romijn et al., 2002; Galende et al.; Gersbach and Schmutaler, 2003; Cassimaman and Veugelet, 2005; Becheikh et al., 2006; Harrison. H4b: Conducting external R&D collaboration increases SMEs' willingness to innovate. It is widely recognized that collaboration is an important means of promoting innovation. R&D collaboration with firms and other institutions has a positive effect on firms' willingness to innovate , which several authors confirm. (Gerbach and Schmutaler 2003, Cassimmam and Veugeller 2005, Dagnino and Roy 2010, Idrissi 2012) H5: Competitive pressure has a positive effect on SMEs' innovation capacity The role of competition on innovation capacity has also been thoroughly investigated in the literature. We therefore assume that competition plays a stimulating role in business innovation, regardless of activity areas (De Jong and Brouwer, 1999; Encaoua and Ulph, 2000; Teoman Pamukçu and Michele Cincera, 2001; Galende et al.; Narula and Zanfei, 2004; Aghion et al., 2005; Florence le Brie et al., 2010; Gorin Autant; , 2012; Rahmouni 2012; Safoulanitou, 2013) H6: A company that performs more R&D activities is more likely to realize an innovation. The presence of R&D activities creates an environment that promotes demand, promotes the flexibility of companies and ensures that their ability to integrate new concepts and their adaptability to changing market conditions remain their important contribution to the innovation process of SMEs. (Julien and Morin, 1995; Baldwin, 1997; Baldwin, Hanel and Sabourin, 2000; St-Pierre and Mathieu, 2003; Bryson and Monnoyer, 2004; OECD, 2005; Adams, 2006; Laursen and Salter, Bencheiksen and Salter, et al. al., 2006 Amara et al., 2008 Vega Jurado et al., Frenza et al., 2009 Raymond and St. Pierre, 2010 Rhaiem Mehdi, 2010 Idriss, 2011 Mairesse and Mohnen, 2011 Adel Tlili et al., 2011; 2012; Jean Christophe, 2012; Maarouf Ramadan, 2012) The hypotheses we formulated provide preliminary and unequivocal answers to the research questions outlined above. The validation of these hypotheses will of course depend on the analysis that will be carried out later and on the survey that we will conduct among a sample of Algerian companies. 9

13General introduction The structure of our work mainly consists of two parts, each consisting of two chapters. In the first part, we introduced the basic principles and determinants of innovation and gave a theoretical overview of the concept and the various variables used as determinants of innovation. In the second part, we draw from an empirical study of Algerian SMEs and analyzed the determinants that can influence the emergence of innovations in the company. Four large chapters are devoted to this. In the first chapter, which consists of two parts, we will try to outline the theoretical and conceptual framework for innovation and define the concepts related to the topic. The first part is devoted to the definition of the concept of innovation, its different meanings and practices. The aim is to show that innovation is a complex field; Therefore, its analysis and understanding require multiple approaches. In the second part, we discuss the different innovation models, then we present the steps that must be followed to achieve innovation in the company and finally we discuss the relationship between innovation and risk. In the second chapter, we will define and explain each of the categories of innovation determinants. Then we explain the most important and critical factors that give the company a favorable basis for innovation. The third chapter consists of three parts: first we present an inventory of Algerian SMEs, we also show the role they play in economic development, in the second part we present the different mechanisms for public support and financing of SMEs and Im I the third part we dedicate an overview of innovation practices in Algerian companies and a small SWOT analysis to identify the innovation position in Algerian SMEs. The final chapter serves to empirically test the key factors driving innovation in Algerian firms. With this study, we want to gain more insight into the factors that influence innovation practices in Algeria. 10

14Part I: Foundations and Determinants of Innovation Chapter 1: Theoretical Aspect of Innovation...13 Chapter 2: Overview of Determinants and Key Factors Driving Innovation 92

15Chapter 1: Theoretical aspect of innovation Section 1: Fundamentals of innovation...13 I. Definitions and typology of innovation 14 II Characteristics, goals and effects of innovation...31 III. The different innovation practices..37 Chapter 2: Models, innovation process and relation to risk...46 I. The different innovation models.. 46 II. The innovation process. 51 III. Innovation/Risks. 76

16Chapter I: The Theoretical Aspect of Innovation Introduction Post-industrial, today's so-called developed countries experienced a craze, even madness, for technological development and innovation. In a world characterized by competitive dynamics, innovation has become an important strategic theme for companies. The globalization of markets and the increasing openness of economies are changing the conditions of competition and forcing companies to change the basis of their competitiveness and financial performance. In other words, a large part of small and medium-sized enterprises face these challenges and must offer competitive goods and services through different production techniques. The constraints of globalization, which have reduced the competitive advantages of companies based mainly on reducing costs and controlling production chains around standardized products 27 , the rapid changes in production technologies and the ever-changing demands and wishes of consumers have led to the innovation process becoming increasingly complex and the possible outcomes more uncertain. 28 In this chapter we want to define the concept of innovation and give a brief overview of the literature on innovation. First of all, we will try to identify the meaning of the concept of innovation, its origin and its main features, highlighting the context that includes factors that require innovation as a compelling and indispensable tool for survival and growth, terms that are fundamentally connected with the word innovation are connected. These characteristics aim to position the concept in impeccable continuity with regard to the economic and organizational development of the company, taking into account innovation as a performance indicator, a pillar of the knowledge economy and a lever for growth. In a second step, we present the different innovation theories that serve to define and define the area of ‚Äč‚Äčour analysis. A representation of the innovation process and its relationship to risk. Section 1: Fundamentals of Innovation Innovation is a concept that can be understood in different ways, but it also includes common sense and the spirit of introducing new things. Despite the diversity of literature on the subject of innovation, one must remember that innovation is not an end in itself, but is produced with the aim of improving production, finding more practical ways of doing things and making money. This should also be the case. It should be emphasized that innovation is a social process, since the intensity and direction of creative activity depends on laws, institutions and rules that regulate the incentive to innovate, the organization and financing of research and development, the exchange of experience and the determination of desire to to use new technologies. The distinction between types of innovation is often incomplete and rarely discussed. Given the complex and interactive nature of innovation activities, it is even more difficult to provide a complete overview of the various innovation activities in the organization. 27 Griffin A. and Page A.L, PDMA, "Success Measurement Project: Recommended Measures for Product Development Success and Failure", Journal of Product Innovation Management, N 13, 1997, P Huet F., The Self-Reinforcing Effects of Collaboration and Innovation Skills, a study on French SMEs, International SME Review, N 19 (1), Industry Canada, 2006, available at visited site

17Chapter I: The theoretical aspect of innovation In this first part, we first discuss the different meanings of the concept of innovation, which is multifaceted and often borrowed from all languages ‚Äč‚Äčand all disciplines. We will then try to clarify the differences that make them different from other concepts (invention, design, etc.). Then we present the different characteristics of the innovation, followed by objectives and effects that vary according to the company's needs. 1 Definitions and typology of innovation 1.1. Definition ‚ÄúLet's imagine a world without airplanes, cars, telecommunications, televisions, refrigerators, telephones, the Internet and agriculture. Where would we be without such essentials as the alphabet, language, printing, etc.? Perhaps you would not read this essay you are reading, and of course I would not even be able to write a word in it. Without innovation, our world would look very, very different.29 There are different definitions of the concept of innovation, authors who define it as an object, other processes and also those who explain it as a result. - Innovation as an object: Damanpour affirms that "innovation can be a new product or service, a new production technology, a new structure or a new management system, a new plan or a new program related to members of the organization."30 That is the concept of innovation. understood as the acceptance of an instrument, system, program, resource, process, product, service, practice or policy, from within or without, that is new to all who use it31 and to which it has been adapted Changes in the environment ( internal and external ) 32. This definition covers different types of innovation and includes all the company's activities and functions. She also explains that an innovative idea in itself does not require new knowledge. Innovation thus explains newness either in the literal sense of new knowledge or in the sense of the first time, whether for the organization or for the individual, despite the fact that it has already been adopted and implemented elsewhere. innovation as a process; This is explained by the fact that many people invest a lot of time and resources in developing and implementing new ideas in their organization to achieve a clearly defined goal. Fagerberg, Jan, "Innovation: a guide to the literature", in Fagerberg, Jan, David C, Mowery and Richard R, Nelson, The Oxford Handbook of Innovation. Oxford University, Press, 2004, P Damanpour, F, Organizational Size and Innovation, Organizational Studies, No. 13, 1999, P Jornenak T. AND Olson O., Unbundling Management Accounting Innovations, Management Accounting Research, No. 10, 1999, P Damanpour , Opcit, P Divry C. 1 Trouve Phillipe, SMEs and Innovation, Labor and Employment Notebook, N 12, 2010, P Van de Ven A., Angle H. and Poole S., Innovation Management Research. Harper Row: New York, 1989, pp. 239 14

18Chapter I: The theoretical aspect of innovation We have collected several definitions from different authors who consider innovation as a process: Author Thompson (1965) Knight (1967) Rowe and Boise (1974) Barreyre (1980) Akrich et al. (1988) Damanpour (1996) Maunoury (1999) Table N 1: Definition of innovation according to different authors Definition Generation, acceptance and implementation of new ideas, processes, products or services Adoption of a change that is new to the organization. Successful use of processes, programs or products that are new to the organization and introduced as a result of decisions made within the organization. A process that results in an original performance that contains value-adding properties. Introduction of an invention in a specific social environment. Original and future-oriented application of a discovery, invention or simply a concept. The act of taking an intuition, discovery, or project to the commercial stage. Road that brings a good product to the right market at the right time, from decision to decision. Efforts to create a desired change centered on the economic or social potential of the organization. Any change that is deliberately introduced by an actor in the economy and its consequences is aimed at and results in a more efficient or satisfactory use of resources - innovation as a result: Until now we have considered innovation as the object of a new idea (action). ) and as a process of action to accept or reject this new idea. The third definition is the result of this action 35, namely the introduction of this new idea. We have adopted some definitions of innovation as an outcome, shown in the following table: Table 2: Definition of innovation as an outcome Authors Dewar and Dutton (1986) Lewis and Seibold (1993) Rogers (1995) Definition of innovation Idea, practice or Material artifact perceived as new by the individual or group of people considering its introduction. Object such as a new technology, idea, product or program introduced into an organization. Idea, practice or object perceived by an individual or other entity as new, subject to assumptions 35 Chanaron, J. and Jolly D., Technological Management: Expanding the Perspective of Management of Technology, Management Decision, vol. 37, no. 8 , 2009, p

19Chapter I: Theoretical aspect of innovation After all the definitions, we can conclude that innovation can mean several things, namely that it is directly linked to the company's needs and goals. 1.2 The origin of the concept of innovation Innovation is a concept derived from the Latin 'novus', meaning 'new'. 36 This term gives rise to three verbs: innovare, novare and renovare, which give rise to three nouns: innovation, innovation and renewal. For example, the term innovation appeared in 1297 and is explained by introducing something new. Since 1307, the term "renewal" has meant an agreement by which an obligation is canceled and replaced by a new one; it is the fact of giving an action newness. Finally, the term "renovation" dates back to the 14th century and describes the restoration of the original condition through major changes. Innovation can take two forms: invention and creation according to Lachman 37. Invention is derived from the Latin word invenire: means to meet and then to find, is to collect known things that have not been put together in any way. Although creation consists in giving birth to something of which no element existed in the state, rather it is also derived from the Latin "creare": to produce and to derive from "crescere": to arrive at the existing, from one to the other page , Le gives Petit Robert gives the following definition of the term "innovation": "to introduce something new, something as yet unknown into an existing thing" 38. This explains why the meaning retained by the latter is different, it is neither an invention , neither a creation nor a discovery, it is a noun derived from the Latin verb innovare, which is to introduce something into an existing thing still unknown to it, and this is the definition we use for our research. So our point of view differs from Lachman's. We follow the direction that the economist Joseph Schumpeter wrote in 1935. He is the origin of the first developments in his subject in the social sciences, stating that without innovation the economy would be stationary and only have knowledge of transformations "which can be considered as smaller than a given order of magnitude, no matter how small, and in an always identical framework", which changes the framework" 40. He also explains that innovation is the only engine for economic development, and he sees in it a new combination of production: " To produce means to combine the things and forces that exist in our field. To produce something differently or in a different way means to combine these forces and these things differently. If, starting from the old, one can arrive at this new combination over time, through small steps and ongoing adaptation, there is change, possibly growth, but no phenomenon" Lachman, Financing the innovation ofSMEs, Economica Edition, Paris, 1993, P. Auber J.E., "Africa featuring the Knowledge-Based Economy" , Communication WBI World Bank, 2005, P Illustrated Encyclopedic Dictionary, Larousse 39 Schumpeter J., Capitalism, Socialism and Democracy, electronic edition by Jean Marie Tremblay, 2004 , P Schumpeter , P. Schumpeter J., Theory of Economic Evolution, Dalloz Edition , 1999, P

20Chapter I: Theoretical aspect of innovation The same author also explains that this concept includes the following five cases: production of a new product or quality that is not yet known to consumers or users; Use of a new manufacturing method or new commercial process that will be virtually unknown in the industry. Opening a new segment. Discovery of a new source of raw materials or semi-finished products that either already existed but were not considered or kept unavailable. Realization of a new organization, such as the emergence of a monopoly situation or the sudden emergence of a monopoly. Since the late 1980s, there seems to be a consensus among experts that innovation is a process that takes place in companies, not as a single technological event, but integrated into the overall problem-solving process. Van de Ven and Dosi argue that innovation is the development and implementation of new ideas to solve problems. 42 Van de Ven believes that innovation can arise from a combination of old ideas, a unique approach that is therefore seen as new by stakeholders. be a consensus about the reality covered by the word innovation. Conceptualizing and measuring innovation involves two themes: one about approaches to studying innovation and the other about the actual definition of the word innovation. With regard to researching innovations in companies, two approaches can be distinguished in the literature: - The object approach consists of identifying and counting individual innovations as a unit of observation. The main shortcoming of this approach lies in the implicit definition of innovation, which ultimately boils down to the perception of what experts consider to be innovations. This approach therefore makes it very difficult to compare different studies, different projects and different countries or regions44; - The subject approach is mainly based on observation of the product or manufacturing process developed or improved in the company45 developing a measure of the novelty of an innovation, which is seen as a significant disadvantage. This approach crystallized in the Oslo manual 46 and became a concept that 42 Van de Ven A.H. and Ferry DL, Measurement and Accessing Organizations, John Wiley and Sons, New York, USA, 1980, P Van de Ven A, Polley DE and Venkataraman S., "The innovation Journey", New York, Oxford University Press at the website visited on 15 July. Archibugi, D. and Planta, M. Measuring technological change through patents and innovation surveys. Technovation, N 16 (9), 1996, P Evangelista, R., Perani, G., Rapiti, F., and Archibugi, D. “The nature of innovation and the impact of innovation in manufacturing: some evidence from the Italian Innovation Survey. Research Policy, N 26 (4-5), 1997, P The Oslo handbook is a reference document prepared by OECD experts. It summarizes the guiding principles for collecting and interpreting innovation data (1992, 1997, 2005) 17

21Chapter I: Theoretical aspect of innovation Several national statistical offices such as the European Community in their research on innovation and also Statistics Canada 47. new combinations and to understand the resulting problems. First, the new combinations can be carried out by the same people who manage the production or replacement process according to the usual combinations that overtook or replaced the new ones. The new combinations, or the enterprises and centers of production which give substance to them, do not suddenly replace the old ones, but oppose them. Second, we should never think that new combinations or their realizations incorporate unused means of production. In general, the new combination inherits the means of production used from the old combination. The creation of new combinations thus means 'a different use of the reserve of means of production in the national economy'.48 Schumpeter uses 'entrepreneurs' to describe the economic actors whose task it is to carry out new combinations and whose active element is. He describes entrepreneurs not only as "independent" economic agents of the barter economy, but also as anyone who actually performs the constitutive function of the concept, even though they are "dependent" employees of a society. Entrepreneurs, according to Schumpeter, are also those who do not have a fixed relationship with an individual company and only take measures to reshape companies. Innovations are the origin of growth phases and thus crises. Schumpeter explains the sequence of crises and recovery solely by the fact that the implementation of new combinations is not evenly distributed over time. The new combinations as they appear appear in groups rather than individually with a fixed frequency. "If new companies arose independently of each other, in our opinion there would not be booms or depressions as special, recognisable, striking, periodic phenomena...( ). There would be no noticeable disruption to the cycle and thus no disruption to overall economic growth. The new combinations do not usually spring from the old, but stand beside and compete with them; The massive demand from entrepreneurs, which mainly means the emergence of new purchasing power, causes a secondary growth wave that extends throughout the economy; Errors due to the increase, errors due to the uncertainty of the success which the new combinations will achieve, play a prominent part in the onset and progression of depression. 47 Guellec D. and Pattison.R, "New growth theories in SMEs", La Découverte, Paris 2000, P Schumpeter, Opcit, P Schumpeter, Opcit, P

22Chapter I: Theoretical aspects of innovation From the 1950s, the concept of innovation was extended to other social science disciplines and in particular to management. In this field, the term is often used to mean very different concepts from search to search. For example, Zaltman et al. identified 50 three different uses of the same term. The first use is almost synonymous with invention, the creative process of combining multiple entities or concepts to create a new configuration. The second use refers to the process by which an existing novelty becomes an integral part of the culture and behavior of the individual or group that adopts it. Finally, the third use denotes the practice, the material, the tool that was invented and considered new. We have already said that in this work we see a clear difference between the concepts of innovation and invention. 1.3 Key Differences: To understand the meaning of innovation, it is imperative to distinguish it from other concepts whose meaning to a layman is more or less similar. When we talk about innovation, it evokes the idea of ‚Äč‚Äčintroducing a radical or marginal novelty in a particular social, technical or scientific system. This concept creates a small reminder of several similar sometimes confused concepts such as discovery, invention, design, creativity. For this we consider it necessary to present the difference between these different concepts. Invention: It is a word derived from the Latin invenire (to meet and then find). It indicates the fact of bringing together known things that have never been put together in a certain way. It is a specific type of montage that was unknown.51 The invention characterizes the human activity of imagination in the creation and manufacture of new objects. The invention is not the discovery which consists in bringing to light a phenomenon, an object, a species, which existed before the author, and which the latter locates, identifies, shows or describes without having done so. On the contrary, an invention consists in creating something that did not exist 52. It is very important to clarify that an invention does not guarantee innovation, but is an invention that is industrialized and brought to the market. Invention is an idea, innovation requires its concrete implementation in the service of users and customers. In addition, there are a significant number of inventions that never become innovations because they are completely useless and do not respond at all to the real needs of potential customers. This invention is often confused with innovation. In both cases, the same "new" result is shown, but it takes time and technical resources to realize the idea behind the invention or innovation 54. What actually separates the two concepts is 50 Zaltman G. "Innovations and Organizations", Wiley edition , New York 1973, P Lachmann J, The finance of innovation strategies, Economica edition, 1993, p. 4. 52 Durand Th. In Encyclopaedia of Management and Management E.G.M, Dalloz Edition, 1999, P Boutiller S. "Economy and economistsFacing Innovation", in Dimitri Uzunidis, "Innovation and Contemporary Economy, Cognitive and Territorial Spaces", Boeck Edition, Brussels, 2004,. M and Zumello.C, "The Entrepreneur and Economic Dynamics, the Anglo-Saxon Approach", Economica Edition, Paris, 2003, p. 49. 19

23Chapter I: Theoretical aspect of innovation-initiating events. Some inventions are indeed intuitive, others accidental, when innovation transforms an already existing invention and is defined by its ability to satisfy a stated or latent need. By confusing the two concepts, the most common assumption is that an invention automatically becomes an innovation 55. However, to make an invention an innovation, companies must mobilize many activities: product design, prototype design, testing and testing, production process design, industrialization Maunoury explains that an invention is a device, a technical scheme that solves a technical problem in a new way or solves a new problem. He also adds that inventions are purely a technical event that shows that we have finally left the realm of speculation and knowledge to enter practice and action. We can say that innovation differs from invention in that its application brings about a radical or progressive social change and it has an effective advantage. The term innovation thus refers to inventions that have arrived at a new product, have actually been manufactured and are commercially viable. Discovery: There is also a difference between innovation and discovery; Literally, "discovery" means to remove that which hides, hides an existing thing, whether that existence is known or unknown. The result of a research process, while the invention is the result of a design process. Discovery is the scientific activity that attempts to observe, describe and model the world around us. Discovery must be clearly distinguished from invention. To be discovered, the phenomenon, object, substance or species thus made known to the world must have existed before its discoverer. Conversely, invention occurs when a human creative activity has created a new object 59. Malinvaud. E defines a discovery as something that not only exists but is seen as a large and sudden increase in knowledge, and well founded enough to appear irreversible 60. He adds in the same context that we are interested in the implications of the discovery we can say has a certain generality and a really significant scope: it should not relate to a single object or event, it should be sufficient. Mira de Bejaia University, 2011, P. Maunoury JL cited by Perrin Design why an approach in relation to the process, P Dictionnaire le Petit Robert, Durand Th, Opcit, P Malinvaud.E cited by Forest J & al, Innovation and Design: why a process approach?‚ÄĚ, 11th French-Quebecois International Congress of Industrial Engineering ALBI

24Chapter I: Theoretical aspect of innovation to be stored in a scientific corpus 61. Indeed, it is important to know that discoveries make it possible to generate more innovations in all areas that concern them 62. Creativity: Creativity and creation, one can for the latter, which comes from the Latin creare (to bring forth) and crescere (to come to), consists in bringing something to life in a similar manner, of which no element previously existed in the state, directly through our senses and perceived by our observation. On the other hand, creativity is a mental process that generates new ideas or new concepts. Creativity is primarily the individual's ability to create something new, to change the human environment. In a broader sense, creativity refers to a set of methods that develop this ability. Some authors use systematic techniques 63. Design: Design means making a series of decisions and creating objects that meet customer needs. Innovation generally consists of studying and implementing a set of resources and collective dynamics to allow a new activity to find its place in the economic and social environment. In general, it is about meeting an actual or potential need, market and viable solutions. 64. There are many definitions of design, but the meaning is the same. Below can be defined all activities and processes that make it possible to move from the idea of ‚Äč‚Äča new product (or improvement of an existing product) to the delivery of all information (plan, descriptions, software, etc.). ), which allows the production of this product to start and guarantees its use and maintenance. Typology of innovation Two dimensions make it possible to characterize innovation. One is to classify the innovations according to the increasing level of sophistication of the offering, from the weaker product that I like to the offering that is so different that there is no equivalent. The second is to characterize the processes that give rise to innovations, according to whether they draw from already mastered processes and know-how or, on the contrary, from new processes. The uncertainty created by the novelty is thus proportional to the demand from the customers who use Cayol.A et al. do not know yet. "Encyclopedia of Management and Management EGM", Edition Dalloz, Paris, 1999, P Uzunidis Dimitri, "Contemporary Innovation and Economy, Cognitive and Territory Space", Edition von Boeck, 2006 P Perrin.J "Designing Industrial Innovation. Innovation Design Methodology" , CNRS Edition, Paris, 2001, pp. 19. 21

25Figure 1: The two dimensions of novelty Strong innovation breakthrough New for the company, e.g. quality improvements for existing products Light Incremental innovation, e.g. repositioning New on the market Light Strong Source: Saparnot.R & Stevens.E, "Innovation Management", edition Dunod, Paris, 2007, p. 10 This first distinction makes it possible to clarify many criteria related to innovation. If innovation is the result of further development of knowledge, we speak of push innovation. The development of science and technology, and more generally of knowledge and know-how, makes it possible to offer customers innovative solutions, born of new productive combinations. When an innovation is based on identifying customer expectations through marketing, we speak of pull innovation. From this perspective, listening to customers and identifying needs and expectations helps develop satisfactory solutions. The available knowledge and technology is then aimed at creating a competitive offer, adapted to the expectations of the identified customers. Recently, several studies on innovation have been limited to two types of innovation, product innovation and process innovation 67. After the third edition of the Oslo handbook, two more types of innovation, marketing innovation and organizational innovation 68 have been included. The distribution is, among other things, as follows: - Product innovation - Process innovation - Commercial innovation - Organizational innovation R & McCann.P, "Innovation, agglomeration and regional development", Journal of Economic Geography, volume 3, October 2005, p. 3. 68 OECD, Olso Handbook, Measurement of science and technology activities, Proposed guidelines for the collection and interpretation of innovation data, European Commission, Eurostat,

26Chapter I: Theoretical aspect of innovation Innovation type Product innovation process Innovation Commercial or marketing innovation Organizational innovation Table N 3: Innovation type Definition It is the introduction of a product or service that is new or significantly improved in terms of functions or intent. . This includes significant improvements in technical specifications, components and materials, embedded software, ease of use or other functional features. This is the introduction of a new or greatly improved production or delivery method. This includes significant changes in techniques, equipment and/or software. It is the introduction of a new sales method that involves significant changes in the design of the product or packaging, the location of the product, the way the product is advertised or the price. It is the implementation of a new organizational method in the company's management practices, the organization of the workplace or external relations. Source: translation from the 2005 Oslo Manual. Widely used by innovation researchers, the first edition of the Oslo Manual was published in 1992 and aimed to propose a methodology for conducting comparative studies of innovation, while the second edition was published in 1997 focused on updating data collection methods to provide guiding principles for the construction of innovation indicators69, finally the third edition presents a further development of the concept of innovation by highlighting the importance of highlighting the relationships between companies and other institutions in the innovation process, as well as as the two new forms of innovation previously presented Innovation (commercial and organizational). Ugly. The relationship between product innovation and process innovation: The most common distinction in the literature is that between product innovation and process innovation. Many authors confirm that there is a certain correlation between product innovations and process innovations. Abernathy and Utterback explain that the birth of an industry begins with a so-called fluid phase, in which the needs of consumers are poorly recognized, and companies therefore look for the best strategies on the market, multiply product innovations and pay little attention to the process plan 70 The next phase is the transition phase, where companies move step by step towards identical technical decisions and product configuration is crucial. Process innovations are proliferating to meet large production needs. Production is gradually specializing and the sector is entering a systemic phase. The profitability and payback of industrial investments has become a priority for the company, and process costs have become very high, which encourages the company to stop innovating 71. Several authors explain that the distinction between product innovation and process innovation is based on the type of ‚Äč‚Äčinnovation. innovation 69 OECD, Olso Handbook, Measurement of Scientific and Technological Activities, European Commission, Eurostat, Abernathy W. and Utterback J., Patterns of Industrial Innovation, Technology Review, N 80(7), 1978, P Pearson.A ‚ÄúManagement of Innovations: a process to reduce uncertainty‚ÄĚ, cited by Cabagnols.A, why are the opportunities for product and process innovation different? Survey results", Study day "Determinants and economic impact and knowledge management"

27Chapter I: Theoretical aspect of innovation seen as such in the latter, while process innovation consists of the transformation of the industrial process to design, manufacture and distribute products or services 72. b. Radical and incremental innovation: These two types of innovation are in the significant based on the degree of innovation intensity. This can be explained by the intensity of the novelty, the usefulness of the innovation or the impact in a certain area. According to the intensity of innovation, Barreyre identifies six classification criteria and considers them to be more or less radical73: - The degree of novelty of a product - The degree of applicability of an innovation - The degree of social and economic effect - The degree of ‚Äč‚Äčtechnological effect - The innovation-promoting character. Radical or disruptive innovations radically change the usual references 74 about the product's performance or costs, for example the replacement of cotton with nylon, the invention of electronic components, but also the purchase of a machine or the change of B. the organization of a distribution system or the internal circulation of information , are often far-reaching. Dimensions of the organization of production. These radical changes are intermittent and their spread has cyclical effects 76. This type of innovation completely changes the use of a technique or introduces a technology that radically changes social habits 77. Incremental innovation (progressive) leads to an incremental improvement of services or costs and does not require new know-how 78, which means that it is based on something new for the organization of small improvements taking into account its adoption and with an emphasis on cost savings. Scale and development, while radical innovation is marked by something new to the world, is amazing. On the axis of processes, the introduction of a new automated production line to produce an existing 80 at a lower price. Hoffman also proposes a distinction between two types of incremental innovation: structural innovations and systemic innovations, the first typology that modifies 72 Loilier. T & Tellier.A, "Gestion de l'innovation, management et soci√©t√©", Economica edition, 1999, P Barreyre P.Y., "Typologie des Innovations", French management overview, January/February 1980, P Broustail J. and Fr√©ry F . , ‚ÄúThe strategic management of innovations‚ÄĚ, Coll. Pr√©cis, Gestion, Dalloz Edition, 1993, P. Bellon.B, "Creative Innovation", Economica Edition, 2002, P. Richard Soparnot and Stevens Eric "The Management of Innovation", Dunod Edition, 2007, P. Giget M. cited by Robles G.C, in "Management of Technological Innovation and Knowledge: Synergy between TRIZ Theory and Case-Based Thinking", Doctoral Thesis in Industrial System 2006, P12 78 Uzunidis D "Contemporary Innovation and Economics", De Boeck ed., 2004, P Hoffman K. & al., "Small Business, Research and Development, Technology and Innovation in the UK: A Literature Review," Technovation, Vol. 18, No. 1, 1999, P Soparnot.R et Stevens.E, Opcit, 2007, p. 11. 24

28Chapter I: Theoretical aspect of innovation Organizational form such as boards or departments, new functions and the formal and informal relationships between the elements that make up this structure. The second type concerns the formal process that enables the organizational structure to function, such as the control planning system. While radical innovations are based on fundamental changes that lead to revolutionary adjustments to product concepts and technological practices. Another division made by William Abernathy and Kim Clark distinguishes between the degree of technological discontinuity (challenges existing technological possibilities) and the impact of an innovation on the market (creates or challenges relationships with the market and customers). This gives you four types of innovation 82: Architectural innovation "Architectural innovation": which turns all technological and commercial data upside down. Innovation that creates niches in the market "Niche innovation": It is based on a certain technological continuity, but has a large impact on the market. Regular innovation Regular innovation equivalent to an incremental innovation. Revolutionary innovation equivalent to a major technological breakthrough that affects existing markets and customers. This classification thus allows better consideration of the distinction between technological breakthrough and commercial impact, but tends to assimilate technology and product. However, a product consists of several technologies, and the development process of the various components of a product is increasingly differentiated from the product itself 83. Another point of view proposes a specific category for innovations based on technologies that are already known, but conceptually a breakage and lead to new consumption habits, such as drinking yogurt. The authors qualify them as "behavioral innovations"84. Their typology is very similar to Abernathy's and Clark's, but "niche-creating innovations" disrupt the relationship between producer and consumer themselves, while behavioral innovations only affect the consumer's habits themselves. The drink can be dispensed like plain yogurt. Pascal Le Masson and others emphasize a characteristic of recent innovation developments: questioning the identity of products. Not only are manufacturers offering an increasing number of new products that did not exist a few years ago, some of which are spreading very quickly among the population, but these are also subject to fluctuations in their identity itself. 81 Toilier T. and Tellier A., ‚Äč‚Äč‚Äč‚Äč"La gestion de l'innovation", Edition Management et Soci√©t√©, 1999, P. Abernathy W. The Productivity Dilemma. Roadblock to Innovation in the Automobile Industry, The John Hopkins University Press, Baltimore 1978, P Durand Thomas and Guerra Vieira Silvia, Calibrating Innovation, Economica Edition, Paris, S2 84 Le Nagard-Assayag E. and Delphine Manceau, Opcit, P

29Chapter I: Theoretical aspect of innovation (It is not easy to predict that mobile phones will be used specifically for photography) 85. According to a study from Quebec, innovations are classified into three main categories: cumulative innovation, significant innovation and transformative innovation 86 Considering the different types of innovation, in our study we are interested in analyzing this typology in relation to the degree of material or immaterial involvement of the company according to its organizational, financial and technological capacity. The company can base its innovation strategy on 87: Imitation: It refers to the reproduction or attempt to reproduce what we see done according to the rules and standards 88 and it depends on the characteristics and innovation goals of the individual company. Implementation: It is also called substitution innovation. The best example that can be given is the use of lasers in optics and then in surgery, in terms of sound reproduction, for textile cutting. Initiative: Also called innovation means proactively creating a new concept, such as the Philips company that developed the digital audio disc player. The answer: also called reactive innovation. This means that the company innovates by responding to a suggestion or inquiry from customers, prescribers or suppliers. The example can be cited at the request of the medical service and linked to the manufacture of medical equipment and surgical procedures. versus another typology Considering this typology, we can divide innovation as follows: Figure 2: Innovation typology Innovation typology Imitative innovation Reactive innovation Proactive innovation 85 Masson, Pascal Le, Beno√ģt Weil and Armand Hatchuel. "Innovation Processes: Innovative Design and Business Growth". Paris, Hermes Science Publications 2006, P Arbaoui Khaira, "The Risks of Innovation in Business, Analytical Essay Based on a Sample of Algerian Companies", Doctoral thesis, supervised by Pr. Chouam Bouchama, University of Oran, Algeria, P Jeffrey Ph., "Reactive or Proactive Innovation?", InnovationManagement.s.e, 2007, P HACHETTE Dictionary, Collection No. 11, Issue

30Chapter I: The Theoretical Aspect of Innovation Imitative Innovation: Traditionally, innovation has been seen as an essential ingredient for business development and growth, but imitation can also be a faster and safer approach. Multiple strategies are used and combined, allowing imitators to drive out innovators. 89: Imitation at a reduced price: The imitator offers the same product at a lower price, it benefits from research and development costs and also often better control of marketing and industrial costs Imitation by improvement: The imitator presents a product of higher value than the product of the innovative company. This strategy is considered a good analysis of consumer needs and their development, as well as a strong ability to question own products. Imitation by exploiting its dominant position: The imitator enjoys advantages in terms of resources, customer knowledge and access to distribution channels. In the table below we present the benefits of innovation and the benefits of imitation; Table N 4: Comparison between the benefits of innovation and imitation. Innovation. Dynamic brand image. Identification of the brand with the new product. Opportunities to capture significant market share without opposition. Ability to define standard techniques. Possibility to protect them with patents. Imitation. Avoid markets that do not exist or are not yet mature Save a large part of R&D costs and thus be able to invest resources in other initiatives Technologically outperform the pioneer by making improvements to the original design So the company faces two situations: Should it share or protect its innovations? ? Likelihood of confusion (forgery): "It is generally accepted that an independent part of a composite trade mark is protected, provided that it is separable from the whole of which the registered sign is composed; that it is distinctive in itself and has a essential character, i.e. this explains why the element in question satisfies this threefold condition: its reproduction or imitation in another trade mark may constitute infringement.89 A. Gargouri, "Consumer Facing Counterfeiting", Master's Thesis in Administration, National Library of Canada , 1997, P. Olovier Mendras, "Counterfeiting by Reproduction or Partial Counterfeiting", Attorney at the Court of Paris, Revue Trademarks, issue 33, January 2001, p. 73. 27

31Chapter I: Theoretical aspect of the latest innovation relates only to a creation protected by an industrial property right or by copyright or related rights. We also note that counterfeiting generally occurs in luxury products in various sectors, such as perfumes, high-end clothing, spare parts, etc. There are several consequences associated with counterfeiting, we can name 91 of them: Decrease in production activity associated with a remarkably low turnover from the company. Lost profit due to lost sales due to counterfeiting. Declining profits to limit the amounts the company is willing to spend on researching new products or improving existing ones. Counterfeits trivialize the brand and damage the image of quality. On the consumer's side, buying a counterfeit product can cause several problems, such as: B. Health risks (e.g. allergies), safety risks (electric shock, burns, etc.) as well as product failure since there is no warranty. Economist Philippe Chalmin also acknowledges the difficulty of measuring the phenomenon: "Objectively, it's all a wet finger." If we could extract percentages, it means that we already had a statistical view and it would not be too opaque. But basically the coverage is immeasurable. Like the drug market, counterfeiting is difficult to measure. The following table explains the development of counterfeiting in the European Union 92: Table N 5: Development of counterfeiting in the EU year million euros Source: Boudoux P, Ilie Arnaud, Opcit, P43 91 Arboui Kheira, Opcit, P46 92 Boudoux Phillipe & Ilie Arnaud, "Report: The impact of counterfeiting on companies in France", prepared in collaboration with the research institute for intellectual property law IRPI, April 2010, p. 46. 28

32Chapter I: The theoretical aspect of innovation According to the Algerian customs authorities, the number of counterfeit goods circulating in Algeria is increasing significantly. In 2007, 1.6 million counterfeit goods were seized in France compared to 2006, of which more than half came from China and more than a third from the United Arab Emirates. Losses due to fraud and counterfeiting are estimated at 200 million euros each year in Algeria. In the Watchlist 301 published by the United States in 2009, Algeria is among the 12 countries with the highest counterfeiting rate in the world. However, significant progress has been made in the country. In March 2008, the Customs established a centralized sub-directorate responsible for combating counterfeiting, and in November of the same year, the local customs entered into a cooperation agreement with the French administration for better operational cooperation between the services in the ports of Oran and Marseille in the field of anti-fraud 93. Imovation: combining the art of imitation and innovation According to several studies, imitation, like innovation, is a source of growth and profit, and this was confirmed by Levitt Theodore “Imitation is only more responsive than innovation, it is a much more paved road to growth and profit "94. Or organizationally, the imitative enterprise must guarantee certain functions: membership of the individual in a group (culture, social class). Participation in the construction of an individual's identity Give consumers the opportunity to differentiate themselves, for example by rejecting the global codes of big brands and acquiring other codes (nation, authenticity, ethics, exoticism, etc.). The company must not copy an innovation in whole or in part, but must strive and inspire to differentiate more or less clearly. We know that great innovations often build on existing ones and base their success on their ability to combine innovation and imitation. Reactive innovation: We are talking here about reactivity, i.e. driving innovation characterized by speed and efficiency, i.e. flexibility, adaptability, versatility. "Responsiveness is the ability to respond quickly to an intervention, an external stimulus or the ability to cope" article "Africa struggles to detect the wrong", Jeune Afrique, No. 2527 14.-20. June Levitt Theodore, "Innovative Imitation", The September Magazine, Harvard Business Review, 1966; Available on site. 95 Dictionary Little Robert

33Chapter I: Theoretical aspect of innovation In the field of entrepreneurship, especially in the innovative business, responsiveness is determined by the following components96: Anticipation: It involves thinking about possible and probable changes without trying to anticipate them too precisely. Anticipation includes in-depth analysis of customer expectations and industry strengths, as well as assessment of likely industry consolidation scenarios, product development, pricing and customer needs. This requires the establishment of a monitoring system that is reflected in the company's coordinated financial intelligence. Identification: To know the development of the market, as well as the development and anomalies related to consumer behavior, competition, fluctuations in supply and demand and changes in logistics chains, the company must conduct an analysis. Regularly and permanently monitor market conditions through powerful tools such as: strategic marketing, knowledge management, statistical approach aimed at managing risks in order to identify the vulnerable areas that require protective measures, but also to identify potential opportunities that require appropriate risk-taking to justify. Answer: It is about responding to market changes faster than competitors, speeding up decision-making, testing different responses as part of an innovative project, and formulating a response on a broader basis. Predefined scenarios are often developed to enable management teams to decide in advance how to respond to certain situations. Adaptation: The company had already recognized the changes in the market and now needs to revise its business process to adapt and be better able to respond to changes in the market in general. Reactive innovation is seen as a response to a clearly defined external need. Proactive innovation: In contrast to reactive innovation, proactive innovation appears to be an essential discipline that is better taken into account and promoted within the company. It is based on the initiative of the commercial departments that identify new or poorly met needs, as well as the technical studies of the services that have the idea of ‚Äč‚Äčnew applications in the form of materials, processes or products. With this in mind, the company plans innovation best practices by managing the innovation program as follows: Looking for new opportunities. Understand the connection between his skills and the goals of his current and future clients. To combine its knowledge workers with tools and systems to accelerate the implementation of new ideas and inventions by focusing efforts on a shared vision of innovation. 96 Arboui Kheira, Opcit, pp. 48-30

34Chapter I: Theoretical aspect of innovation 2 Characteristics, goals and impact of innovation: 2.1 Characteristics of innovation Innovation generally responds to the need to strengthen the company's financial and competitive position. It has many characteristics, of which we mention the following: Innovation is a long process: between the emergence of the idea of ‚Äč‚Äča product and its appearance on the market, 10 to 15 years pass, sometimes more. It is subject to many evolutionary factors, because in the formation phase, depending on science, technology and the economic situation, the market will develop 97. Innovation is a collective process that involves virtually all companies and functions of the company, which involves creativity and motivation of all actors 98 Innovation often requires different resources, laboratories, pilots, marketing organization, distribution networks require very different actors because of their education, know-how and style. It thus has an interdisciplinary and multidisciplinary character, which is increasingly emphasized these days. It is a phenomenon that varies considerably from industry to industry and from company to company within the same industry sector. Innovations are not a class of repeated, homogeneous events. Experience has shown that some types of innovation are more or less risky than others. Despite a company's experience with innovations, the value of R&D teams, marketing and advertising, the latter is not always sure that it will succeed in this area. 99 Innovation is a high-risk activity. These risks include financial, human, commercial and technological risks. 100 Innovation is a phenomenon that never ends. The following diagram explains the characteristics of innovation in its various forms: 97 Boly Vincent, 'Ing√©nierie de l'innovation', edition Lavoisier, Paris, 2004, p. 56 98 Callon M., quoted by Gonard Thierry and Louazel Michel, ' Understanding the processes Technical innovation using the network concept: a research programme", International Strategy Department of the ESC Nante Atlantique Group, 1994, available at: 99 Tremblay Diane Gabrielle, "Innovation, management and economy: How economic theory takes account of innovation in the company." ¬Ľ , 2003, P Sander Anne, Opcit, P20. 31

35Chapter I: Theoretical aspect of innovation Figure N 3: Characteristics of innovation in SMEs Innovation Project type: Process equipment Product stage: R&D Introduction Growth Maturity intensity: Radical systematic incremental identification of risk elements for innovation Source: Weil TH., "The Management of Innovation in Companies ", Annals of Mines, December 2003, p. 59 Midler and Lenfle identify six main characteristics 101: An innovation project is characterized by a goal to be achieved, broken down in terms of deadlines, costs and performance of the developed offering. The measurement of the effectiveness of their control is mainly based on these three parameters. An innovation project is unique 102. Of course, one cannot imagine relying on previous successes to reduce risks. In this sense, there can be no innovation profession based on rules derived from experience. The innovation project requires the integration of many actors and experts inside and outside the organization, each of whom will contribute to all or parts of the future design. This organization strongly rejects the Taylorian principles of work vision 103. Callon argues that "innovation is produced by collectives that benefit from the work of a number of other collectives 104". The innovation project is risky 105. We cannot know at the start of the project which solutions will be effective, not even the exact end of the process, if any. The aim of the innovation project is precisely to reduce this uncertainty. The innovation project is characterized by a progressive learning process embedded in an irreversible temporality 106. In other words, the series of decisions 101 Midler.C and Lenfle.S, "Project Management and Innovation", in Muster P., Penan H. , Encyclopedia of Innovation, Paris, Economica, 2003, P Callon M. and Latour B. “How to monitor innovation? Key to Sociotechnical Analysis", Prospective and Public Health, 1985, P Bourbonnais R. & Usunier J.C., "Sales Forecasting, theory and practice", Paris, Economica, 2007, P Callon M., cited by Gonard.T and Louazel .M ., "Understanding the process of technical innovation using the network concept: a research program", Department of International Strategy Groupe ESC Nantes Atlantique, P04, available on the website: accessed 30.04.2019 Midler.C, "The car that made it." does not exist : project management and business transformation", Paris, Inter-Edition, 1993, p. 67. 32

36Chapter I: Theoretical aspect of innovation The facts throughout the process will limit the rest of the development, where it is never possible to go back to any of them except to start a new development again. The choice of project management method is therefore as important as any decisions made during the project. The project is an open and swinging space. Since it is not possible to define the project in advance within a precise framework, it must be recognized that unforeseen actors, such as suppliers, may play an important role that was not defined at the start. Measures of innovation After presenting the different definitions of innovation and their typologies. Now we will see what their goals are. To answer this question, we note that innovation varies depending on the company's goals, either from the point of view of the product or/and the market, and the goals to be achieved with its activity. The goals of innovation are different depending on the needs of the company. To make the innovation decision, the company is usually guided by its objectives, both in terms of products and markets and the goals it wants to achieve through its innovation activity 108. Several innovation objectives can be maintained 109: Value creation: The provision of R&D services proves that innovation means first showing its customers and shareholders that the company is proactive and ahead of the competition by creating value through innovation. Conquering new markets: Depending on the case, innovation responds to a need, an idea, a customer wish or an event. It can also be an integral part of a new market development policy and help attract customers in unoccupied niches. This new direction will be part of a global business strategy. Successful in Exporting: Innovation is essential to excel in exporting. It provides flexibility to adapt to new markets, cultural differences and new needs. Innovation therefore means being aware of export demand, adapting and thus increasing export capacity by offering innovative products. 106 Amar.N, Lamari.M and Landry.R, "Learning and innovation: an econometric analysis based on survey data in firms in the Quebec and Chaudière-Appalaches regions", Canada, Spring/Printemps, 2001, P2, available from : Tremblay D.G, "Social Transformations and Governance: Have We Learned?" Have we renewed ourselves? Case of multimedia in Montreal", research presentation from the Canada Research Chair on the socio-organizational issues of the knowledge economy, October 2003, P. Courlet Claude, Pecqueur Bertrand, Soulage Bernard, "Industry and territorial dynamics", review of the industrial economy, volume 64, 2 .quarter 1993, P Available on the website: hal.archivesouvertes.fr/docs/00/05/79/85/pdf/mobatteurs.pdf 109 OECD Measurement of scientific and technological activity - Proposed guidelines for the collection and interpretation of data on technological innovation. Oslo manual. Available at < (accessed 3/10/2012). 33

37Chapter I: Theoretical aspect of innovation Improving your offer: Innovation does not necessarily mean creating new products. Innovation is not necessarily radical or disruptive, but can be incremental by improving an existing product. The perfection of the existing is an innovative approach. This form is often less complex to set up and offers simpler processes, but can be just as effective in differentiating you from the competition. 110. Expectation: Innovation means taking the initiative to offer customers a new, well-designed product without the customer making a request that is sometimes imprecise or ill-defined. Anticipating means offering the customer a viable product, taking into account his needs, but also all related technological, production, cost and after-sales needs, a parameter that the customer has not necessarily integrated into the exit. Anticipation thus accelerates the innovation process. Leave the competition: Standing out from the competition is one of the goals of any business. Innovation is one of the spearheads. As we have seen, offering new products is not the only challenge of innovation 111. Offering the same products as competitors, cheaper and better adapted to the times and changing needs, is an advantage to stand out. An innovative company also projects a strong self-image to its customers and differentiates itself from the competition. Stay in control: One of the best ways to stay competitive is to stay in control through innovation in many ways. Being at the forefront of new technologies, deciding when to launch them, mastering the competition by mastering the production of materials, trends and technologies ensures better control of the market. Managing Change: Advances in technology help the global market to change constantly. Innovating means controlling the parameters of change, because innovation is not only about technological character, but also about services, working methods, organization and logistics. An innovative SME will rethink its internal organization within communication services, distribution and production. 112. Mobilize workers: Commitment to innovation keeps workers mobile by keeping them motivated and offering training opportunities. For employees, the opportunity to contribute new ideas, participate in the innovation process, be part of an innovative company 113, be recognized by competitors and customers reinforces the interest factors and inhibits mobility. 110 Tremblay.D, "Innovation, management and economics: how does economic theory represent innovation in companies?", Dalloz edition, 2003, P Lacave M, quoted from Kendel.H "SME agglomeration and technological development", CRRM, Marseille, 2012 , P Chabault Denis "Territorial Systems of Production: Literature Review and Theoretical Approaches to an Evolving Concept" CERMAT, IAE de Tours P10, available on the website: Darchen.S & Tremblay.D "Environmental Innovators and the Creative Class: Review of the Writings and the analysis of their application in the urban environment", Canadian Research Chair in Community Organizational Issues. From the knowledge economy, N, P

38Chapter I: The Theoretical Aspect of Innovation Survival: Innovation is in vogue, and one must beware of radical innovations that turn upside down everything in their path. But companies today don't have much choice. Innovation or retreat, that is their fate. The well-established company will have focused on innovation, regardless of its area or size114. We can see other effects of innovation on SMEs115: replacing products taken out of the commercial cycle; Expand the range of competitive products: In the main product area; Outside the main area. develop products that reduce environmental hazards; maintain and/or increase a product's market share; Adapt and open new markets for a product: Abroad; With new target groups nationwide. To provide more flexibility to production methods; Reduce production costs by: reducing labor costs per produced unit; reduction of material consumption; reduction of energy consumption; limiting the bounce rate; reduction of product design costs; Shortening of production times. improving the quality of a product; improve working conditions. 2.3 The impact of innovation: The impact that innovation can have is diverse, all essentially related to growth or socio-economic development. For greater clarity, we elaborate on the following points: - Innovation, growth and employment: new theories of so-called endogenous growth 116 emphasize that the development of knowledge and technological change are the engines behind sustainable growth and not just the accumulation of capital. According to these theories, governments can influence the fundamentals of economic growth by developing knowledge, one of the most important sources of innovation. 114 Boly Vincent, "Innovation Engineering", Edition Lavoisier, Paris, 2004, P Juliette Garnier. CRAFT projects: a solution for European technology partnerships for SMEs? Master of Sciences and Techniques Cultures, European Economies. Promotion Pascal Lamy. 1999/2001. Available at 886's=http%3A%2F%2Fwww.up.univ-mrs.fr%2F%7Ewmstcee%2Foeuvres%2Fmemoires2001%2FP2001- Garnier.PDF (accessed 2013-02-03) 116 set of economic theories developed at the end of of the 1980s, taking into account factors such as externalities, rising incomes, R&D spending and increased public spending on education and training35

39Chapter I: Theoretical Aspects of Innovation According to Schumpeter 117, the transformation of the economic system can only be of a qualitative nature. The development of the economy becomes synonymous with novelty. At the end of his analysis, he shows that innovation is essential for economic development and that the economy would be static if the system did not spontaneously generate new productive combinations; These are the result of innovations or technical advances. The public sector can also influence the dissemination of knowledge and skills in business and society. For example, by facilitating the mobility of people and the interaction between companies and external sources of competence, especially universities, but also by ensuring that competition is fully exercised and by fighting corporatism. The link between innovation and employment is complex. In principle, technical progress leads to new prosperity. In fact, product innovation leads to greater effective demand, which leads to more investment and employment. Process innovations help increase productivity by increasing production and/or reducing costs. This ultimately leads to an increase in purchasing power and thus in employment. However, it is true that the rapid introduction of these innovations into the production system may lead to short-term job losses due to the obsolescence of certain types of skills. This may be due to the education system's slow or inefficient adaptation to techno-industrial changes, but also the rigidity of the labor market in general. It is possible that job losses in some sectors will be offset by job creation in others, such as the service sector. In addition, innovation can help reverse the decline of traditional industries through increased productivity and more efficient ways of working. - Innovation and the company: Almost every new company comes from an innovative approach, at least compared to the existing competitors in the market. To survive and grow, companies must continuously innovate, even if only in small steps. Innovation enables the company to anticipate market needs, offer extra quality or services, organize efficiently, manage deadlines and control costs. It makes it possible to achieve undeniable competitive advantages. Innovation also makes it possible to increase a company's productivity through the development of new or significantly improved production processes, which promotes competitiveness and gives it a competitive advantage by reducing production costs per unit. unit. Product innovation enables the company to excel by launching a new product (good or service) or an existing product in the market. However, the integration of a novelty that promotes its non-price competitiveness also gives it a temporary competitive advantage 118. This allows companies to strengthen their competitiveness and improve their market position by increasing their productivity and improving the quality of their products or services. and development of key competences. 117 Bailly Pascal, "The Relation Between Technological Advancement and Growth in Schumpeter," Strategic Management Journal, Volume 21, P. St. Amant G. and Renard L., "Capacity or organizational skills development: What is related to organizational skills", Notebook of Research by ESG-UQAM, doc, P

40Chapter I: Theoretical Aspects of Innovation - Innovation and Society: Innovation is not just an economic mechanism or a technical process. It is primarily a social phenomenon. Through this, individuals and society express their creativity, needs and wishes. Therefore, innovation, whether in its purpose, its effects or its methods, is closely related to the social conditions under which it occurs. The history, culture, education, political and institutional organization and economic structure of any society ultimately determine its ability to create and accept new things. This is another reason to pay the greatest attention to the application of the subsidiarity principle in innovation support policies. Innovation can and must provide an answer to the decisive problems of our time. It enables the improvement of living conditions, examples: new ways of diagnosing and treating diseases, road safety, easier communication, a more favorable environment. It also makes it possible to improve working conditions and safety, to respect the environment (new production processes to avoid or reduce polluting waste), to conserve natural and energy resources and to promote new forms of work. This is the case of teleworking, which sometimes has social and health consequences or encourages certain types of travel, but is also a factor in urban decentralization and rural job creation. While innovations generally lead to better living and working conditions, care must be taken that new methods of work organization (eg 'just in time') do not lead to job insecurity. 3 The different innovation practices 3.1 Measuring innovation: It should be noted that the measurement of innovation from the 1950s to today has gone through three main periods, each of which is related to the development of explanations of the determinants of innovation. : In the first period, between the 1950s and 1960s, innovation was measured in terms of R&D activities, as these activities were considered by experts to be the most critical driver of innovation. On the other hand, experts in the second period ( ) believed that the main driver of innovation was the introduction of advanced technologies and not R&D activities. The third period began in 1990 and continues to this day. Since the early 1990s, innovation has been measured in a new way. The experts believe that innovation must be measured directly and not indirectly. They have therefore gradually begun to take action with regard to the product and process innovations that appear in the company. Over time, R&D activities are increasingly seen as an indicator of the degree of professionalization of innovation activities in companies, while the use of advanced technologies is increasingly seen as an indicator of the technological intensity of innovation processes. 119 R√©jean Landry, "Innovation of products and production processes in manufacturing enterprises in the eastern townships. State of the situation and options for action. Study conducted for the Action Group for Technological Advancement in Estrie (GATE) ¬Ľ Laval University, Quebec, Canada. September Available at < (accessed 27-02-2013).37

41Chapter I: Theoretical aspect of manufacturing innovation Support for innovation activities. In this view, the degree of professionalization and the technological intensity of companies become indicators that determine the intellectual and technological possibilities of innovations. According to the Oslo Manual 120, there are two main methods for collecting data on product and process innovation: The "subject approach", which is based on the innovative attitudes and activities of the whole company. The aim is to determine the factors that influence the company's innovation behavior (strategies, incentives and barriers to innovation) and the scope of the various innovation activities and, above all, to get a picture of the results. and the impact of innovation. Such surveys are designed to be representative of each industry as a whole, allowing for cross-industry comparisons after raw results are extrapolated. The "object approach", which consists of collecting data on specific innovations (usually a "significant" innovation or a company's most important innovation). In this case, we first create a list of successful innovations, often based on expert reviews or a list of new products advertised in trade magazines. The goal is therefore to collect a certain amount of descriptive, quantitative and qualitative data about a specific innovation, while also collecting data about the company. From the point of view of the current economic development, it is the different degrees of success of the companies that determine the economic effects and are therefore interesting for the actions of the public sector. What counts is the subject, i.e. the company (first method), and the experts also believe that the "subject approach" is better suited to international standardization. This also applies to the Oslo Handbook, which therefore recommends that countries use the 'subject approach' when conducting their innovation studies, although the 'object approach' can provide interesting additional information, especially when both approaches are used together. It should also be noted that measuring innovation is not limited to manufacturing innovation, but also includes the service sector, which has become the nerve center for employment and manufacturing issues. Today, one can even say that the line between industry and services (as innovative sectors) is gradually being blurred in many areas. It therefore makes sense to extend innovation surveys to the service sector in order to obtain a meaningful measurement. 3.2 Innovation practices Innovation activities can be defined as "all scientific, technological, organizational, financial and commercial steps, including investments in new knowledge, which lead to or are intended to lead to the realization of products and processes. technologically new or improved." R&D is just one of these activities and can be carried out at different stages of the innovation process, as it is not used by 120 OECD countries. Measuring Scientific and Technological Activity - Suggested Guidelines for Collecting and Interpreting Data on Technological Innovation. Oslo manual. Available at < (accessed 3/10/2013). 38

42Chapter I: Theoretical Aspect of Innovation not only as a source of inventive ideas but also to solve problems that may arise at any point leading up to realization 121‚ÄĚ. Most current studies and statistics are content to show that R&D expenditure is the most important indicator of the intensity of companies' innovation efforts. From our point of view, research and development is only one of its aspects. The source of innovation is not only related to research and development, but can also be a new combination of existing technologies or the acquisition of new technologies, as well as an activity of organizing resources. To bring an innovation to market successfully, companies must invest resources across multiple activities. In another sense, innovation practices also include R&D that is not directly related to the development of a specific innovation. Depending on the type of innovation, we can distinguish between different practices. Nor is the innovation process only limited to the scientific phase of research and development, for which the OECD suggests six additional practices that can be integrated into the innovation process122: bringing new products to the market, working with patents, changes in the financial or administrative order (economic) . simulation, company restructuring, etc.) Investigations related to the final products (testing, design, etc.) Preparation for the actual production of the product or service (quality, change of production equipment and tools, etc.) Commissioning costs for new manufacturing (series testing, training). Innovation can therefore develop in different ways and not only through new technologies. This can be done through the integration of new production processes or production organization or a commercial approach or through the implementation of the human and economic dimension. Innovation and its industrial development depend on cultural factors, management training and socio-economic and socio-professional factors. Ugly. Practices related to product and process innovation In this case we can distinguish between the different types of product and process innovation activities. As an innovation activity, acquisition of other knowledge from outside can be: Acquisition of knowledge and technology from outside can take the form of patents, patented inventions, licenses, publication of know-how, trademarking, design studies and models. May also include computer services and other scientific and technical services to carry out product or process innovation activities. Lachmann.J 1993, Op Cit, P Workshop on Science, Technology and Innovation Statistics, "Introduction to Measurement of Experimental Research and Development", Tunis, Tunisia, January 2005 Available at: 39

43Chapter I: Theoretical aspect of innovation Acquisition of machinery, equipment and other capital goods: Innovation activities also include acquisition of capital goods, goods offering improved technological performance and goods whose technical performance has not been improved but which are necessary for the implementation of new or improved products or processes. . In fact, in companies with high skill productivity, we often find that training is the activity associated with the most common innovation. However, the company's acquisition of new equipment requires raising the level of its staff skills through training. Other preparations for product and process innovations: A company's development of innovations may involve a number of internal activities that do not fall under R&D. These activities include both later stages of development and, more importantly, the introduction of product or process innovations that are new to the company but not to the market. Development and implementation activities for the introduction of new goods, services or processes can form a significant part of the innovation activity. Preparation for the commercialization of product innovations: includes market research, test marketing and advertising around the launch of new or significantly improved goods or services. Training: is a product or process innovation activity when it is necessary for the realization of a product or process innovation. B. Practices related to marketing and organizational innovation: we can mention the following cases: Preparations for marketing innovation: includes activities aimed at developing and implementing new marketing methods that have not been used by companies before; this category generates the use of external knowledge, machines, etc. equipment and training activities specifically related to marketing innovations. Preparation for organizational innovation: This includes the development and planning of new organizational methods and the activities required to implement them. This category also includes the acquisition of other foreign knowledge, machinery and equipment and other capital goods, as well as training activities specifically related to organizational innovation. 124 Clark.K, "Investing in New Technology and Competitive Advantage," in The Competitive Challenge, edited by Teece D.J, Harper and Row, 1987, P. Darchen Sebastien and Tremblay Diane Gabrielle, "Innovative Circles and the Creative Class: Review of Writings and analysis of their use in the urban environment‚ÄĚ, The Canadian Research Chair in the Socio-Organizational Questions of the Knowledge Economy, N , P 20 40

44Chapter I: Theoretical aspect of innovation c. Resources to be mobilized in innovation: To realize the development of the innovation process, all the company's resources must be carefully mobilized. Of course, there are several ways to combine business activities with industrial implementation. Other companies are only in the pre-development process, while others are just entering the post-development phase (product development or even just the marketing phase). Linear and corresponding to a chronological sequence of well-ordered functions. But that no longer applies. Due to the interdependence of the successive phases from before to after production, the type of organization has a decisive influence on the innovation process. Many essential factors must interact in complete mutation. According to Lachmann, in addition to the technology, the following factors should also be taken into account: 129: Human factors: because managers do not all see the risk of innovations in the same way, due to their education, their field of activity, their company's financial situation. Social and cultural factors: Because the spread of innovations encounters psychological barriers and habits that are deeply rooted in the company. These develop only gradually and under the influence of various pressures, such as information and awareness campaigns, spillover effects, increasing skill levels and fierce competition. Economic factors: Competitive pressure or the need to ensure a company's survival in an open market can make the company innovate to a greater or lesser extent depending on the area of ‚Äč‚Äčactivity. Economic factors: The resources used naturally depend on the company's financial situation. If there is no strong correlation between the resources devoted to the innovation process and the financial results to be achieved, one should be aware that it is better for the company to master the innovation than to be forced by the competition or simply to disappear from the market . . Market. The combination of all these factors within companies leads to their positioning in the innovation process and, above all, to the greater or lesser importance that can be attributed to one of these factors. In conclusion, we can say that innovation is a difficult concept to define. Innovation is almost always collaborative, and its development depends on market acceptance, which is the penalty for success or failure. 126 Levesque, Klein J.L, Fontan J-M and Bordeleau.D, P09, I Yvon Martineau, Claire Poitras and Michel Tr√©panier, "Scientific and technological agglomerations. Synthesis of scientific and institutional literature. Final report submitted to the INRS Urbanization Science and Technology Advisory Board. May Available on website: Lachmann.J, Op Cit, 1993, P. Chabault Denis, "Territorial production systems: literature review and theoretical approaches to an evolving concept," CERMAT, IAE de Tours, p. 10. Available on website: Lachmann .J, Opcit, P50. 41

45Chapter I: Theoretical aspect Innovations act in isolation in time and in a given economic space, but it is a global process of different actions that unite for the exploitation of a new product or service. In the end, it is a continuous process with several actions at the beginning, each of which is crucial for the realization of the entire program. In other words, it involves multiple and ongoing relationships. 3.3 Factors that facilitate or inhibit innovation There are various factors that facilitate innovation, but there are also other factors that inhibit innovation. This applies to any process, and depending on the situation and how companies implement it, different factors apply, as innovation levers can easily become brakes and vice versa. According to the OECD130, the innovation measures include: Information: According to various OECD studies, different internal or external sources of information are used. The OECD considers the list below to be relevant sources. Internal sources in the company or group: - Internal R&D activities - Marketing - Production - Other internal sources. External/commercial sources: - Competitors - Purchase of embedded technology - Purchase of non-embedded technology - Customers - Consulting firms - Suppliers of equipment, materials, components and software. B. Educational/research institutions: higher education institutions, public research institutions, private research institutions. versus public information: conferences, meetings and journals on patent publications; fairs and exhibitions. 130 OECD. Measuring Scientific and Technological Activity - Suggested Guidelines for Collecting and Interpreting Data on Technological Innovation. Oslo manual. Available at < (accessed 3/10/2013). 42

46Chapter I: Theoretical aspect of innovation On the other hand, according to the OECD study, several elements are considered to be relevant to block or slow down innovation activity 131: Economic factors Risks perceived as excessive Costs too high Lack of suitable sources of finance Payback too long for investments in innovation b . Company-specific factors: Insufficient innovation potential (R&D, design studies, etc.) Lack of qualified personnel Lack of information about the technology Lack of information about the markets Difficult to control innovation costs Resistance to changes in the company Availability of insufficient external services Lack of cooperation opportunities. versus other reasons: Lack of technological capabilities Lack of adequate infrastructure No need for innovation due to previous innovations Weak protection of property rights Legislation, norms, rules, standards, taxes Lack of customer interest in new products and processes. Note that innovation is not based on isolated elements or agents, but on an interaction between them and the information flows that circulate between the firm and its environment. 3.4 Opportunities and constraints: measuring the risk of innovation We face a number of paradoxes: on the one hand, competitive or regulatory constraints have never been stronger, and on the other hand, market opportunities have never been stronger; On the one hand, SMEs spend their time on innovation and show great creativity and flexibility, on the other hand they are subject to increasingly strong and diverse constraints. They risk being left out of the market and encountering banking problems too often and again and again. At the SME level, we find the highest birth and death rates in the economy. So the company has to choose between two large and conflicting risks: the risk of being innovative and the risk of not being innovative. 131 Courlet C, Pecqueur B and Soulage.B "Industry and Territorial Dynamics", in Review of Industrial Economy, Vol 64, Q2 1993, pp 7-21. Available on the website: hal.archivesouvertes.fr/docs/00/05/79/85/pdf/mobatteurs.pdf 43

47Chapter I: Theoretical aspects of innovation The risk of innovation: The decision to innovate is a risky process, as the innovator is generally not a priori certain that his inventive performance will be commercially rewarded or even technologically successful. As with other economic activities whose outcome is uncertain, L.W. Steele that there is a fundamental difference between risk and uncertainty. For him, risk is the mathematical product of the (partial) probability of failure and the magnitude of the economic or organizational consequences. The risk is therefore of a predictable or probable nature. Uncertainty, on the other hand, is not. 132 Risks associated with innovation come in four different forms: commercial risk, technological or organizational risk, personal risk and financial risk. o Commercial risks: These risks are related to the market's acceptance or non-acceptance of the new product. These risks only arise at the end of the process, i.e. after the creation of a new product. Innovation must first generate profits and confront the company's position. Consistency between innovation and market is crucial, i.e. H. via the market, the behavior of buyers and competitors is seen separately, but without forgetting the involvement of suppliers, sub-suppliers and support institutions that influence the production environment. The development in market shares and the return on investment are therefore the first risk indicators. o Technological or organizational risks: These arise during the implementation of the new organization. The duration of these risks extends from development to marketing of the product. Any innovative project must successfully manage deadlines, costs and quality. Each of the stages o The risks to people According to the study carried out by the Treasury Canada Secretariat, the threats and opportunities associated with innovation are illustrated as follows: 18 44

48Chapter I: Theoretical aspect of innovation Figure N 4: Threats and opportunities related to innovation When difficulties or opportunities arise, the following chains of events can occur. Make innovative decisions and actions that involve risk-taking. Taking reasonable risks can lead to honest mistakes. How do we handle errors? No feedback, no learning, no change. We ignore it. No feedback, no learning, no change. We hide it. Negative feedback: stop innovation. We use it to motivate a link. Positive feedback: learn, improve. We use it to deepen knowledge. This chain of events can lead to a vicious circle or a virtuous circle. If the feedback is negative, and even honest mistakes resulting from taking reasonable risks lead to reprimands, the spirit of innovation is suppressed in favor of following the rules. When the source's comments are positive, the spirit of innovation, willingness to take risks, the secretariat and knowledge of the board are appreciated, strengthened and refined. Source: Website: Accessed on 13/04/2013. We believe that this diagram clearly explains the introduction of new behavior and expresses the ability to tolerate mistakes during an innovation without blaming the people involved, provided they learn from it: Developing the spirit of a learning organization. 45

49Chapter I: Theoretical aspect of innovation Section 2: Innovation models and processes 1. Different innovation models According to recent literature, several authors have emphasized the importance of scientific knowledge in the innovation process and concluded that it is classical or traditional, what is called. the linear model of called innovation. The model does not really take into account the interaction between the different elements of the innovation. For this reason, several other models have been proposed that emphasize this complicity. In economic theories of innovation, two models of innovation are often opposed: the science push model or science driving innovation and the demand pull model or market demand driving innovation. 1.1 The linear model of science drives innovation The 'traditional or linear model' actually depicted innovation as a conveyor belt or a relay race where the discoveries of basic research (especially the university) were subject to various experimental applications. The products were then developed by the company and were subsequently commercially available. The first modeling was initiated by the Austrian economist Joseph Shumpeter ( ), and in the 1950s/1960s this model appeared, where product development was based on technological advances that guided research policy. This model suggests that innovation arises from a one-dimensional flow that leaves no room for feedback. H. for feedback between one step and another, originating from scientific and research and development activities and ending in a commercial application. He sees innovation as a linear process (a sequence of mandatory and orderly steps) rather than as an outcome. This process starts with a scientific discovery and then follows various phases such as invention, technology, manufacturing and finally the launch of a new product/service/process. This way of working requires a segmented organization, specialization of employees and service activities. It is based on the idea that the stages of the innovation process are predictable and the resources to be mobilized can be predicted in advance. The steps may vary in number and specificity, but the process necessarily begins with invention, then comes research and development, and always ends with innovation. Research and development remains the core of this process 134. This model consists of the following elements. Figure N 5: The linear model of innovation (science push) basic knowledge design and technology manufacturing marketing distribution Source: Guillermo Cortes Robles, "Management of technology innovation and knowledge: synergy between TRIZ theory and case-based reasoning". Application in Engineering of Industrial Processes and Systems, Dissertation on Industrial Systems, Toulouse, 2006, P. Perrin Jacques, "Concevoir l'innovation Industrielle", CNRS Edition, Paris, 2001, P

50Chapter I: Theoretical aspects of innovation The Science Push model focuses on the quality of research as a decisive factor for companies' exploitation of it. It is based on the premise that high-quality research is automatically and quickly adopted and used by companies. It is therefore no longer necessary to establish linkage mechanisms between researchers and companies, nor to make an effort to disseminate their research results. The role of governments here is therefore limited to funding research. In fact, they limited themselves to assuming a promotional role until the end of s. Because knowledge transfer was not as automatic and fast as assumed in this model, another model was developed, the demand-pull model. 1.2 The demand-pull model When the diversification of demand in a market was identified as the trigger for the innovation process, the previous model (based on R&D activities) was not sufficient to explain the observed fluctuations. This has led to research into another model: the demand-driven innovation model. This model was designed in the late 1960s and early 1970s, focusing on market opportunities and customer needs. Figure N 6: The pull demand model. Market needs, development, production, sales. Source: Guillermo Cortes Robles, Op Cit, p. 16. In the model, innovation is seen as derived from a perceived demand in a market that changes the development and direction of technology. In this model, innovation is initiated by the department, which is in direct contact with the customer and, based on this experience, can point out existing problems during product design or suggest new directions for research and development 135. In summary, the market is the source of ideas for the research and development manager. In the demand-pull model, the initiative shifts from researchers to companies. In fact, it is the companies that determine the tasks that the researchers perform to meet the needs of these companies. This model is based on the assumption that the fact that research is commissioned by companies to meet their needs means that the query returns relevant results that are automatically used by companies. As in the first model, it is assumed that it is not necessary to develop linkage mechanisms between researchers and users or to invest resources in the dissemination of research results. In this case, the government's role is to provide grants and tax incentives to companies to conduct research that meets their needs of universities and various other public and private research organizations. 135 R√©jean Landry, Product and production process innovation in production facilities in Estrie Current situation and options for action. Study conducted for the Action Group for Technological Advancement in Estrie (GATE) ¬Ľ Laval University, Quebec, Canada. September Available at < (accessed 27-02-2013). 47

51Chapter I: The theoretical aspect of innovation is currently encouraged in all developed countries, but their mixed success has contributed to the emergence of another model of knowledge application (fourth model). 1.3 The pair model: The third model is a combination of the two previous models. It describes the interaction between market, technology and organization. The coupling model is seen as a process of sequential, linear, logical and discontinuous interaction. A new trend is emerging in this model: a feedback loop between R&D activities and the market. Figure N 7: The coupling model The new needs The needs of society and the market Idea generation Research, design and development Prototyping Manufacturing Market and distribution The market The new technology The state of affairs and production Source: Guillermo Cortes Robles , Op Cit , P Kline and Rosenberg's innovation model (fourth generation): In 1986, Kline and Rosenberg presented an integrated model of the innovation process called the "Chain Linked Model" or "Interconnected Chain". The main difference between this new and the old model is that there is no main activity in the innovation process (IP). It can follow different paths 136. This innovation model represents several innovation processes 137: At the beginning, it represents the main innovation process (or innovation path), which consists of a series of design activities (from invention to production activity). This process is indicated by the letter C in the figure, the other type of innovation process concerns feedbacks between related activities, indicated by the letter F, or feedbacks between unrelated activities in the same chain (indicated by the letter f). . The third type of process involves the formalization of connections between science and innovation and especially knowledge and research (relation 1 and 2), (relation 3), (relation D). Finally, the latter process involves technological innovations that also contribute to advances in scientific research (indicated by the letters I and S). 136 Joelle Forest, Jean Pierre Micaelli and Jacques Perrin, "Innovation and design: why a process approach", Journal of Product Innovation Management, N 12 (5), 2010, p. 7 137 Chalus-Sauvannet M.C., "Integrating monitoring in the The corporate organizational system: What are the challenges for innovation", The Review of Management Science: Direction and Management. Economic Intelligence and Innovation Strategy, N 41 (218), 2011, p.

52Chapter I: Theoretical aspect of innovation Figure N 8: The linked chain model Source: Stephen J. Kline and Nathan Rosenberg, An Overview of Innovation, in The Positive SUM Strategy: Harnessing Technology for Economic Growth, ed. Ralph Landau and Nathan Rosenberg (Washington, D.C.: National Academy Press, 1986, p. 289). In conclusion, we argue that the main contribution of the Chain-Link model is to present innovation as a process of interaction between companies and basic research into the different functions of the company, between consumers and producers. Although this model does not explicitly consider the financial aspect of innovation, the authors hypothesize that costs increase as the process progresses, which may affect an organization's ability to innovate. The knowledge dissemination model focuses on creating dissemination mechanisms that can increase the transfer of information to companies. This model was developed in response to the fact that, although there are examples of successful unplanned knowledge transfer, knowledge transfer does not happen automatically. In this model, the role of governments is to finance both research and the dissemination of research results. Such policies have been implemented in several countries where university research offices and technology transfer centers are located. The main limitation of this model is that the potential users are neither involved in the selection of the submitted information nor in the creation of the search results. 1.5 The Fifth Generation Model: The fifth generation innovation model designed by Rothwell, called the Systems Integrations and Networking Model or SIN, is characterized by an increasing strategy of integration between different organizations inside and outside the company, but also by the impact of various technological, electronic, computer - and information and communication elements (ICT) in the innovation process (IP). The SIN model is a parallel integration and development model that aims to better align with business strategies. The latter uses expert systems and simulation. The actors in the innovation process are customer-oriented, and there is a strong interaction between suppliers and competitors. The products are based on the relationship: company supplier customer. 49

53Chapter I: Theoretical aspect of innovation This model is further characterized by a horizontal organization that aims to bring together the R&D, Marketing and Production groups. It emphasizes the importance of flexibility in the company in terms of development speed, quality and other non-quantifiable factors. The main feature of this model is that it provides an empirical framework for measuring different elements of the innovation process. 138 This interaction model was developed by experts in response to the limitations of the mediation model. The starting point for this model is that intensive and sustainable interactions between researchers and companies, but also between companies and other actors in their environment, increase the use of knowledge from research. This model emphasizes the interactions that exist between the holders of tacit and codified knowledge and the users in the implementation of product and process innovation projects. Government policy in the 1980s and 1990s sought to further strengthen and formalize the links between the various actors involved in the development of innovations through several partnership programs involving researchers, companies and other stakeholders in product development and process innovations. By examining the behavior of actors and institutions that can influence the development of product and process innovations, a new approach has been developed, namely innovation systems Figure N 9: Fifth generation model Packaging Production Distribution Product development Systematic innovation Intelligence Finance Marketing studies Source: Arboui Kheira, opcit, P56 The fifth generation innovation concept thus sees innovation as a multi-actor process, as illustrated in the previous diagram. 138 The Science and Technology Council. For an innovation policy in Quebec. Management Report Science and Technology Council/Canada. 50

54Chapter I: Theoretical aspects of innovation 2. The process and financing of innovation The concept of innovation has developed over time and is becoming increasingly complex. It affects almost all business activities. The innovation process as a source of economic growth has been the subject of various discussions and intensive research (Schumpeter, Schomookler, Kline & Rosenberg). At this point, we describe this innovation process. In fact, innovation remains a collective process, the company cannot develop in isolation, innovation is the result of multiple interactions between various internal (R&D, production, marketing, etc.) and external (research centers such as universities, laboratories, etc.) . It is also the behavior of these actors and their interactions that form the so-called "National Innovation System" on three levels: the innovative company, the local environment and the global environment (as in the figure below). . Figure N 10: The three levels of the innovation system Source: The Council for Science and Technology. For an innovation policy in Quebec. In: Conseil de la Science et de la Technologie, ‚ÄúOpinion ‚Äď Innovation in Services For a Strategy of the Intangibles / Quebec 2003 Next, we note that in the innovation process, according to the Oslo manual published by the OECD, there are three levels, each This level is represented of a sphere consisting of different actors, each of which may be different, each sphere requiring a different kind of state involvement and a different kind of goal in its policies. OECD, Direction de Public Governance and Territorial Development, "The regional dimension of innovation", 20 November

55Chapter I: Theoretical aspect of innovation Level 1: The company as an innovation engine: The determinants of the company's internal innovation process are represented by: The existence of an R&D core The quality of the design; The quality, level of human competence (including the leadership of the entrepreneur); The organization of work and the management of human resources; The quality of marketing; The quality of management (strategic innovation decisions); The availability of financial resources. Although the company represents the core or center of the innovation process, one cannot ignore the importance of the quality of the resources involved in this process by measuring the relevance and intensity of these actors. B. Second level: The local environment: This level explains the exchanges that the company carries out by creating a network and represents a fundamental element for the development of the innovation capability Here we can mention: alliances, collaborations, customer supplier relationships, joint control systems, etc.; Innovative competitive companies in the same market; The market situation for the company's products, trends in demand, etc. This level also includes research centers and university or state laboratories that directly contribute to innovation in the company in the form of a partnership or contract. We can also mention the financial organizations that also interact with the company. versus third level: the global environment: Consists of the social, cultural and economic environment we find: the environment in which the company operates, whether from a regulatory or legislative point of view, from an economic point of view such as inflation, exchange rate or on the page for the availability of financial assistance or government support. Basic infrastructure, including telecommunications; the scientific and technical context (education, training and research system); Scientific and technical culture and culture of innovation. Thus, at this third level, it becomes possible to identify a number of government responsibilities in science and technology, knowing that government has the most crucial role to play in the global environment. Indeed, for certain dimensions of this environment, often only the government is able to act, and the social actors accept, usually by consensus, that the state plays its leading role there. In addition, it is also the state that takes care of creating an innovation-friendly environment, since factors such as the tax system or regulatory aspects, even if they are not exclusively related to innovation, have a significant influence on companies' investment decisions. On the other hand, other factors, such as the system of intellectual property rights and transport or telecommunication infrastructures, have a direct impact on the innovative capacity of companies. 52

56Chapter I: Theoretical aspect of innovation The innovation-friendly environment should also include the promotion of an "innovation culture" aimed at developing an interest in knowledge and the technological universe and an understanding of the role of innovation among the population as a whole from an early age in a country's economy and for its inhabitants' quality of life. In addition, the innovation process also depends on a greater dissemination of knowledge. Therefore, the innovation policies of most industrialized countries recognize the need for public support for basic scientific and technological research to maintain innovation capacity. As for human resources, they remain at the heart of the innovative company's problem and thus at the heart of the entire innovation system. The development of scientific and technical skills is the cornerstone, the strategic and decisive factor of the knowledge-based economy. The state therefore has the main responsibility in this area, as it can support the education system in consultation with all its public and private partners. 2.1 Stages of the innovation process: Several studies have focused on the costs of innovation and have divided it into different stages of the innovation process. Among these studies we find that of Mansfield 1971, which is based on two studies, the first of which was carried out. The study published by the US Department of Commerce in 1967 produced a panel called the "Ribbon Panel", and the second study by Saville focuses on the mining equipment sector. The tape panel relies on an evaluation by 20 industry experts to provide an estimate. Due to the cost structure of the production process, the innovation process consists of the following 5 steps: - Advanced R&D, fundamental invention - Engineering and product design - Tooling and production engineering - Start-up production (manufacturing) - Marketing introduction Via Saville, his study is based on deadlines for the realization of product innovations , he proposes the following division: - Preparation of the necessary project conditions and the basic specifications - Industrial drawing of the production, planning of the produced quantities and tools - Design, production of Prototypes and testing - Production research includes 6 phases of the innovation process 141: - Applied research - Specifications - Prototype or pilot line, design and construction - Production, planning and tooling - Start of production - Market introduction 140 Saville. A, "Mining Machine Industry," Iron and Coal Trade Review, September 19, 1958, cited by Mansfield 1971, S. Mansfield, E. Patents and Innovation: An Empirical Study. Management Science 32,. No. 2, p

57Chapter I: Theoretical Aspects of Innovation Following these studies, Kamin et al., picked up Mansfield's work in 1971 and focused on the case of innovations of different complexity made by firms of different sizes in several industries. It concluded that the innovation process goes through 4 phases142: - Research and development, including laboratory prototypes and basic pilot processes or test benches - Transition to industrial products or processes, including preparations for industrial production, industrial prototypes, pilots and industrial-scale activities. - Designed, built and started industrial production by adding line modifications and existing tooling but not investing in production line equipment. - Market penetration and setting up market infrastructures for the new product in or next to the company's commercial offices. Another study in the same direction was carried out on 83 Canadian projects 143 and arrived at the following breakdown of the innovation process: - Research and development - Capital - Design and production engineering - Tooling and industrial engineering - Increase in production - Market introduction - Patent application In this Canadian study we find that two phases of the innovation process are not taken into account, first the capital investment, then the patent applications and the financial and organizational aspects, as we believe that these are an integral part of the innovation costs, but are not independent steps in the innovation process. We therefore believe that their ranking reflects their relative importance in terms of cost rather than their place in the process. Therefore, we will eliminate these two positions in our comparative study of the different phases of the innovation process, and we have also identified four common phases: research and development, industrialization, start of production and market introduction. The R&D phase is divided into several phases in most of the divisions presented, except for the fourth, Kamin et al. (1982). So the first stage of the 144 Charpie body includes basic research and invention, so we can say that this division does not distinguish between innovation and invention processes. The R&D phase includes applied research (Mansfield 1971), a phase of project preparation and definition of the main characteristics of the new product or process (Mansfield 1971, Saville 1958) and a development phase which includes the design, construction and testing of prototypes or prototype Pilot Lines ( Panel Charpie 1967, Mansfield 1971, Saville 1958, Canadian Statistics 1975). 142 Lierna P. Economic theory of innovation on the site ftp://ricardo.u-strasbg.fr/ visited on 10/03. Statistics Canada, Selected Statistics on Technological Innovation in Industry, category N (Ottawa, 1975), cited by Kamin et al. 1982, S. Anne Le Bars "Innovation without research: skills for innovation in agri-food SMEs", PhD thesis in applied economics, Pierre Mendés-France University, 2001, p

58Chapter I: Theoretical aspect of innovation The next phase, which we call industrialization, is defined homogeneously in the various factories. It is a transition phase between development and production that leads to the preparation of the industrial tool. This phase is critical as the tests performed at laboratory scale must be scaled up and adapted to production scale. The phase that we call the start of production is also uniformly defined. On the other hand, there is no consensus on the final phase of the marketing launch. The latter is omitted in Saville's collapse (1958). As for Mansfield, he does not see marketing launch as the final stage of the innovation process. But knowing it was such an important step, he collected data on the costs of this activity. Market research, advertising campaigns, establishing a distribution system, and training sales personnel in the new product's features fall into this category (Mansfield 1971). The following overview diagram summarizes all phases of the innovation process: Figure N 11: The innovation process Discover Explore A goal The world of thinking (creativity) Design critique Validate Improve Develop The world of action Evaluate a product Source: Website 55

59Chapter I: Theoretical Aspect of Innovation To summarize the innovation process, we can summarize this approach as follows: Identification: Going back a bit, we defined that innovation is based on an original idea. Therefore, the company cannot innovate without actually having an idea. In this phase, the company must answer the following questions: why innovate? Innovation for whom? What is the strategic importance? What is the expected profit? What function is to be performed? What must be fulfilled? To answer all these questions, you must first come up with an original idea, verify that you are the first with this idea by conducting a survey of the environment (customers, suppliers, competitors, distributors, etc.) and much more. It is necessary to investigate and ensure that this idea is not patented before committing to implementing it. Second, to ensure that there is a real market for this innovation, does it mean that originality must be compared to the needs of the market and that a significant advantage must be ensured? Third, make sure there is a real consumer need and demand. B. Preparation: Conduct a feasibility study to determine the conditions for implementation and to assess interests and risks. A number of concerns arise at this stage, namely: is the opportunity real? Is it technically possible (constraints, rules, technology, principle)? Is it economically viable? vs. Go-to-market: get the innovation off the ground, make the investments, bring the product or service to market and make adjustments where necessary. In this phase, the company must: define the objectives, organize, divide into phases, plan, define the monitoring and success indicators, identify the necessary resources. D. Valorization: maximizing successful innovations by expanding the range, attacking neighboring markets, approaching foreign markets, alone or in collaboration, launching second generation products. The following diagram better explains the procedure presented below: 56

60Chapter I: Theoretical aspect of the innovation Figure 12: The innovation process Idea Formalization of the idea Verification of feasibility Project definition Analysis of risks Risk controlled? No Check the project Yes Identify the help Yes Available resources Carry out the project No Check the project Assess the feedback Results Source: CRTA The diagram explains that the innovation process relates to the organization of the company and gives it a specific innovation-based culture. It is based on a proactive and continuous approach that makes it possible to build a real organization using tools and methods to encourage, streamline and leverage innovation. 145 Resource Center for Advanced Techniques, Microenterprise Innovation,

61Chapter I: Theoretical aspect of innovation In order for the innovation process to be effective, it must bring together a number of factors that really promote innovation 146. Of these factors, we will only mention those that are often mentioned, which are divided into two categories 147 The the first category relates to the intrinsic factors that stimulate creativity and enable the implementation of new ideas. These are: Risk management strategies: To be meaningful, risk-taking must be measured and not limited by the instinctive temptation to avoid risk. Employee autonomy: Employees must have the freedom and power to make decisions about their own work. This independence is a stimulating factor for innovation. Leadership skills and change management strategies: Since the factors on which successful innovation depends are beyond an individual's direct control, leadership skills are important for mobilizing the necessary resources. and collaboration with other employees. Personal traits: Some studies show that certain personality traits promote innovation. In fact, risk-taking, creativity, flexibility and openness can be factors for success with innovations. Skills: Innovative activity requires the production of certain resources. These resources can be both material and human, or even know-how, without which the new ideas implemented could not bear fruit. The second category of factors is categorized as contextual factors which include the supporting infrastructure that drives progress. These are: Cultural traits: According to some studies, certain types of cultures promote innovation: results cultures, cultures that encourage continuous improvement, cultures that promote "excellence" or the pursuit of high standards, and cultures that foster a climate of greatness and trust. Political incentives: One of the factors that can affect the innovation potential is the type of accountability systems that govern behavior in the organization. Programs that reward personal initiative have been found to be generally conducive to innovation. The value placed on innovation by leaders of an organization or business would also be an important factor, particularly because of its impact on specific policy decisions. Organizational structures: Certain forms of organization such as teams, projects, dedicated laboratories or think tanks are more innovation-friendly because the exchange of ideas leads to the emergence of new ideas. 147 Canadian Center for Management Development on the learning organization. First overview of the innovation literature. Working paper prepared for the Action Research Roundtable on Learning Organizations at the Canadian Center for Management Development. Last updated: 15 May Available at < (accessed 25/02)

62Chapter I: Theoretical aspect of innovation Infrastructures: Providing researchers with a technological infrastructure, institutional partnerships and an important knowledge and research base plays an important role in promoting innovation. It should be noted that the measurement of innovation from the 1950s until today has gone through three main periods, each of which is associated with the development of explanations of the determinants of innovation148: - In the first period between the 1950s and 1960 's was innovation was measured by R&D activities, as the experts considered these activities as the most critical driver of innovation. - On the other hand, experts in the second period ( ) believed that the main driving force behind innovation was the introduction of advanced technologies and not R&D activities. - The third period began in 1990 and continues to this day. Since the early 1990s, innovation has been measured in a new way. In fact, experts believe that innovation should be measured directly, not indirectly. They have therefore gradually begun to take action with regard to the product and process innovations that appear in the company. Over time, R&D activities are increasingly seen as an indicator of the degree of professionalization of innovation activities in companies, while the use of advanced technologies is increasingly seen as an indicator of the technological intensity of innovation processes. In this view, the degree of professionalization and the technological intensity of companies become indicators that determine the intellectual and technological possibilities of innovations. 2.2 The technical innovation triangle According to M. Giget, innovation is not limited to the technological aspects (innovation of processes, products) that link research and development to production and the market. We should not neglect commercial innovations (connection between production and market) that can be profitable like the previous ones. Although the three poles (research, production and market) clearly define an innovation triangle, this is only part of the ten faces of what Mr. Giget called the innovation diamond. of all the missing resources: human and financial. It is also important to remember that innovation cannot be reduced to the concept of technology. Innovation is not only of a technical nature, but also commercial, organizational and financial. Elsewhere, the linear representation of the innovation process does not provide a sufficient overview of the company's internal relationships, which are necessary for the innovation process. In fact, the company's creativity lies in its ability to achieve a double synthesis: research into possible applications of technologies mastered at the product and market level and vice versa, searching for technological solutions to meet the perceived needs of the market. Therefore, a direct axis of exchange between the R&D and management functions is important. Innovation of products and production processes at manufacturing companies in Eastern Townships Status and trade opportunities. Study conducted for the Action Group for Technological Advancement in Estrie (GATE) ¬Ľ Laval University, Quebec, Canada. September Available at < (accessed 27-02-2013). 59

63Chapter I: Theoretical aspect of commercial/marketing innovations, carriers of product innovations, knowledge of market needs and context of use to be taken into account already in the design phase. In summary, in a company's process of technical innovation, there is a relationship between the three fundamental and irreducible elements of analysis: Scientific and technical skills or research and development b. Production skills c. Commercial and marketing skills These three relationship axes are illustrated in the figure below. They define the three main categories of technical innovation: Product innovation Process innovation Sales innovation Figure N 13: The triangle of technical innovation: Innovation occurs on the axes of communication between the company's functions. Supplier and sub-supplier Own production unit Production innovation Production innovation in sales R&D Marketing Sales R&D center Own and affiliated laboratories External laboratories Own commercial network Sales customers Product innovation Source: Giget Marc, "l'innovation dans l'entreprise", 2007, p.15 As the original An idea or invention usually occurs at the level of one of the three specialisms. Innovation comes from the relationship between these skills and not at the level of each of them. They are necessary and the engine of the innovation process. They are usually not enough. When the collaboration between marketing/sales and R&D structures a product innovation approach, it is far from exclusive, as production is also crucial. It takes 60

64Chapter I: Theoretical aspect of innovation production and it is desirable that the issue of manufacturing intervenes as early as possible in the design process. This is evident in the so-called process industries, but less pronounced in others, where protracted production start-up problems often arise due to the late consideration (after the realization of the prototype) of the production problem. 2.3 The innovation diamond It is thus recognized that innovation is not limited to the domain of technology alone. The most promising innovations and opportunities to reposition the company in the competitive environment develop not only in the relationship between the company's technical capabilities, but also in the use of its human and financial resources. According to M.GIGET, a company's five most basic functions are: 149 The two resource functions (human and financial) and the three competence functions (scientific and technical, production and marketing/sales). For Fauteur, ten main axes of innovation should be highlighted in any approach to promoting innovation. A finer division of business functions and capabilities results in a multiplication of axes along which innovation can take place. Some typical innovations on the total innovation diamond are shown in the figure below, which shows the extreme diversity of these innovations outside the technical domain. The diamond of total innovation brings together all the company's functions, and the development of an innovation on one of the latter's interfunctional axes leads through contagion to other innovations on the adjacent axes. "The diamond of total innovation" thus gives us the opportunity to illuminate the many facets of innovation, the basic characteristic of which is that they all spring from interfunctional dialogue. 149 Giget M., Opcit, p. 20 61

65Chapter I: Theoretical aspect of innovation Figure #14: The diamond of total innovation by Marc GIGET. Source: GIGET M, 2007, p. 16.a. The role of human resources Human resources come from various areas of organizational innovation, whether manufacturing, R&D management or commercial operations, marketing and the sales force. This function plays an important role in the organization; Her tasks are: - Recruitment: on the one hand to ensure sufficient attractiveness to attract the right candidates and on the other hand to select the most relevant, competent and creative candidates with the following characteristics: high degree of curiosity and expertise, self-motivation, high ambiguity and risk tolerance, etc. - The incentive and reward system: The results of research on incentive and reward systems show that innovative people are particularly sensitive to "intrinsic" sources of motivation, ie. they are directly related to their work. (to acquire new skills, autonomy and freedom in the workplace) and not on an external incentive system. However, this does not preclude the use of external motivational devices. The external incentive system. For example, a bonus or salary increase can be seen as a form of recognition by the company for the efforts and results that have been achieved. 62

66Chapter I: Theoretical aspect of innovation Human capital can have a direct and indirect influence on productivity growth and help close the technological gap to the limit. Through their skills and abilities, a highly skilled workforce can directly contribute to productivity growth by stimulating innovation. It can also indirectly make it easier to mimic the technological frontiers and absorb external knowledge. B. Function of financial resources Financial resources flow from the axes of innovation financing of the various business functions, especially research, production and sales. Two key words can summarize the specifics of financing innovation: uncertainty and risk. Knowing that innovation is trying to spread something new, it is very difficult to judge the results. If we also integrate an R&D phase that can bring surprises, good (performance better than forecasts, related or bad inventions (up to the total inability to develop the expected product)), we see that the level of uncertainty and thus the risk is very high. Regardless of the resources used to develop a technology, there will be costs involved, and the result of this innovation will generate a need for funding. Risks associated with technological innovation have led to the emergence of specific financing channels, which is naturally the case Differences between large companies and start-ups 150. The case of large companies Large companies finance innovation in different ways, depending on the stage of progress, usually only possible at the end of ‚Äč‚Äčthe process (e.g. B. to finance the necessary investments for production). The costs are difficult to estimate. Not only is the development of an innovative product always a high-risk process, the commercial costs can also be difficult to estimate. Some large companies have internal venture capital structures that are likely to not only support their employees' projects financially, but also invest early in companies whose technological potential they consider interesting. The case of start-ups Funding of young, high-tech startups is inevitably specific. This type of company generally needs relatively large long-term financing to ensure the development of its project. It usually takes several years for the company to generate revenue and another few years for it to turn a profit. Such financing can therefore only be carried out with own funds. 150 start-ups: It is a young innovative company with strong development potential that requires significant investment to finance its rapid growth. Start-ups emerged in the late 1990s, they mean "to start", in other words, the entity in question is a business creation, but in practice it is essentially associated with an innovative business that continues to attract individuals and investors and therefore give them some developmental ability to imagine new ways of organizing their business to seize this opportunity, such as entrepreneur-innovator Schumpeter 151. Venture capital: It is a source of equity financing that affects only a limited number of new companies and therefore limits cannot be used in relation to local projects. "Venture capital" can be defined as any activity of acquiring temporary or minority interests in unlisted companies with a view to future capital gains 63

67Chapter I: Theoretical aspect of innovation The axis connecting human resources to financial resources involves many innovations related to the financial relationship of individuals to the company: participation, bonus, reimbursement from employees, self-management, redefinition of remuneration criteria, etc. vs. The marketing/sales function mainly deals with the development of new products. It provides the opportunity to provide the key elements that enable decisions to be made regarding the target markets; as it also participates in the definition of: - The technical characteristics of the product, formalized in the form of a concept. "Useful both for filtering new product development projects (prioritizing concepts) and for displaying concepts (it is very cheap to change a design at this stage, as opposed to incorporating changes once the engineering development process has started. )" Price; The three factors that must be taken into account when setting the price of a product are: the cost of production, the value in the eyes of potential customers or consumers, and the price of the competitor's product. Knowing that a new product innovation creates uncertainty about each of these elements. - A form of mediation and communication. Communication plays a very important role. If the company chooses a penetration strategy, it combines a moderate price, strong communication and great effort to quickly be present in the distribution networks. If it communicates a lot, but its product cannot be found in retailers, it is an advantage over the competition. Conversely, some will opt for a more gradual increase in pace, both in terms of distribution and communication, which will then be aimed more at 'innovative' consumers, which usually comes at a price for the skim. D. The production function intervenes in the process of technological innovation in various ways. First of all, it is responsible for the industrialization of new products. It is also the function most closely associated with quality procedures, which can play an important role in the process of new product development, although it largely involves the entire organization. The production function also uses a lot of technology in its daily activities: manufacturing and management of logistics and supply processes, which we have included here for the sake of clarity, but which have often become independent in large industrial companies today. e. The role of the logistics/delivery function Purchasing departments play an important role in technology decisions, but also in component-related decisions. Purchasing was long considered a purely operational department within the production function. With an increasing share of the value of an externally manufactured product, purchasing departments are more autonomous and directly linked to management. This also applies to the logistics function as a whole. It is important to note that the development of an innovation along one of a company's transverse axes usually involves spillover to other innovations.

68Chapter I: Theoretical aspect of the innovation axes. The process can sometimes extend to all areas of a global innovation approach and affect the entire organization. F. Research and development (R&D) R&D is as much a business function as production, marketing and sales. It has its place in the company's organization and is relatively easy to spot. In the organizational structure, research and development is usually one of the most important departments of the company, and in the innovation process it is carried out by R&D researchers and engineers; It intervenes and focuses on the execution of production processes. The spatial structure is located in the central laboratories and in the decentralized R&D units in the product areas. The terms research and development are often linked in companies' general vocabulary and organizational structures. Although the boundaries are not always very clear, a distinction must be made between basic research, i.e. without pursuing concrete short-term applications, and applied research dealing with the solution of specific problems with products or their processes and development translate the results thereof. research into salable products or usable processes. The scope of R&D departments also varies from company to company, depending on whether they concern only research in the true sense or include design and/or industrialization offices. The R&D department generally focuses on applied research and development of new products and processes. Only a few very large companies, mostly in high-tech sectors, also do basic research. Research and development has two roles or "sides"; On the one hand, R&D activities generate innovations, on the other hand they improve companies' ability to identify and assimilate external knowledge. Internal development (through the R&D department) is the most traditional approach to innovation. It is of course the one that gives the company the most independence in successful innovation. But it is also the riskiest, longest and most expensive. Research and development has become a strategic development factor for companies aiming to become 'world-class' organisations, especially manufacturing SMEs. Formal research and development activities as indicators of innovation do not necessarily lead to higher levels of product innovation in SMEs. Nevertheless, research and development should be useful both for the development of products and production processes and for maintaining and increasing the company's ability to process and use external information. The presence of R&D activities makes it possible to create an environment that promotes demand, thereby promoting the flexibility of companies, their ability to integrate new concepts and their ability to adapt to changing market conditions. In addition, the experiences and results of past R&D activities and their sustainability, as opposed to their selective implementation, should promote innovation in companies. 153 Corbel Pascal, "Technology, innovation, strategy". Edition Gualino lextenso. 2009, pp. 66, 65

69Chapter I: Theoretical aspect of innovation Localization of R&D activities In management, the concept of localization can have two different meanings, which are not independent of each other, but do not necessarily have the same meaning. The first corresponds to the general meaning: the geographical location of the activities. The second is more colorful: it is the location of the activities in the company's organizational chart. Let's start by looking at the situation in the company's organizational structure. Centralization or decentralization of the R&D function? The emergence of centralized laboratories dates back to the early 20th century in the United States and immediately after the Second World War in Great Britain154. The advantages of this type of central laboratories are obvious: - R&D programs are easier to coordinate This type of structure prevents several laboratories from the same group working in parallel (without consultation) on the same project. - The research team can reach a critical size to solve more complex problems. - This type of structure allows for investment savings by avoiding the duplication of expensive equipment. - This type of laboratory is far from operational problems and has a more long-term perspective. But the combination of this detachment from operational concerns, the natural tendency of scientists to strive for autonomy and technical excellence without always being concerned about commercial and financial aspects, and the difficulty of measuring the results of R&D departments have led many companies to to involve their R&D. departments. bring departments closer to operational activities or even integrate market mechanisms within the R&D departments themselves 155. This can take the form of a tender (of several laboratories within a group, but also with laboratories outside the group), a transformation of R&D laboratories in profit centers with a need to find financing outside the group (especially through outsourcing to other companies). Multidivisional structures (originating from the 1920s in the United States) are structures characterized by being organized into divisions that are generally set up based on target markets, either geographically or by product type, and more importantly, have broad autonomy with respect to the departments of a central company. Thus, each division is treated as a profit center and managed almost as an independent enterprise, with headquarters limited to determining key strategic orientations; When setting up R&D departments, this is easier to achieve at departmental level than at central level. In most cases, research and development remains within the group. As GAILLARD points out, "As an exception, these outsourced R&D structures sometimes have to publish their results outside the company. However, if in most cases they 'sell' their research to an 'external' entity, then this entity is still in the company. R&D in combination with increased use of cross-functional project teams has led to an in-depth analysis of the changes in controls within these departments. 154 CORBEL Pascal, (2009), Op Cit, p. Ibid. p Gaillard JM, "Marketing and Management in research and development", Edition Economica 2000, pp. 56, 66

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70Chapter I: The theoretical aspect of innovation is also a change in the very role of the researcher, who is led to take on an increasing share of management tasks 157. It is also, as GAILLARD 158 summarizes, about finding a balance between strong autonomy, a potential source of more radical innovations and tighter controls that avoid possible overshoots, both financially and in terms of coherence between R&D projects and business strategy: "A balance must be struck between the need for autonomy in an R&D activity to define itself, orient and find its place in the structure, and the need to control the structure it is in to avoid costly deviations, part of the wider problem companies face in balancing the need to meet customers' immediate needs and foresee potential technological breakthroughs in the future Geographical location of the laboratories The choice of geographical location is not independent of the dilemma between centralized and decentralized research. Some companies that have decided to decentralize their R&D as much as possible place their laboratories in the factories. Several studies have been conducted to determine the selection criteria for companies when determining their R&D location. These high value-added activities are actually very attractive to countries or regions that want to attract them to their territory. The main criteria that appear regularly are not surprising. Their hierarchy naturally depends on the company's activities and the nature of the R&D involved: - The existence of infrastructures (transport, telecommunications) of sufficient quality is a prerequisite; - Companies are then attracted by specific skills; As these skills become more widespread, labor and other operating costs can become a burden; - On the other hand, these skills are reinforced by the presence of high-level educational and research institutions; - Companies therefore also aim for connection to local networks; - Proximity to customers can play an important role, especially in activities aimed at adapting products to local specific conditions; - Proximity to production sites, both internal and external (subcontractors), can play a role when industrialization is difficult; - The institutional environment, which can be important in certain areas. Innovation hubs (not just labs) can be set up to stimulate creativity. There is certainly no miracle recipe in this area. However, it can be ensured that an innovation-friendly environment is generally created and that planning decisions are then aligned with those affecting the company's structure or incentive systems/rewards. In general, the organization should encourage the flow of information and encourage unexpected meetings. The space can also be arranged according to the architecture of the projects, especially when the need for creativity becomes less important than the need for an efficient implementation of a development process. Through this section we could conclude that the different parts of the company are sources of innovation. The different resources and capabilities of the company through the different functions of the latter, 157 Accard P. and Hermel P., "R&D and Quality in Businesses", Proceedings of the Agrh City Congress. Montreal. 1997, P Gaillard JM, On Cit.. p 88 67

71Chapter I: Theoretical Aspects of Innovation is likely to contribute to the emergence of all kinds of innovations, but the coordination, interaction and synergies between them are even more promising in terms of competitiveness and better performance of the industry. 2.4 The innovation system Schumpeter's founders have strongly influenced innovation theories and are the source of the process of creative destruction: a dynamic process in which new technologies replace old ones and bring about changes in economic structures. Innovation systems can be defined in different ways, spatially, geographically and sectorally. The geographically defined IS can be local, regional or national. Limited 'sectoral' innovation systems are only part of a regional, national or international system. They are assigned to specific technology areas. The importance of regions for innovation is growing because they create favorable conditions for innovators to benefit from close ties. Innovation policy is increasingly about regional interaction. Regional innovation systems derive their systemic strength from 'agglomeration economies' and an intensive exchange of tacit knowledge. National innovation systems have regional roots and global reach 159. The approach of local and regional business networks makes the analysis of global innovation systems (national, international) more comprehensive and understandable. Network companies in their immediate location thus become a contributing factor to the formation of dynamic learning processes, such as the virtual circles of knowledge building necessary for innovation at local, regional and national levels. Theoretical and methodological impressions make it difficult to clarify the concept of spatialization. The term local and local region have multiple meanings, leading to a variety of terms ranging from industrial district, territorial production system, local industrial structure, localized industrial system to innovative environment, which clarifies both importance and difficulty. meet in one concept. Despite the theoretical and methodological difficulties, the local and regional is essentially a territory that identifies with a specific territorial identity and culture, that positions itself as an "actor" that has its own social capital that makes it possible to see it as a socially interpreted institutional response. for economic development. In this way, the local and the regional are interpreted as the result of a social construction process that is a result of the actors' and phenomena's strategies for collective learning, and not as a priori given. Therefore, these two terms are used interchangeably. The concept of the national innovation system has been the subject of much work since 1975 and has been gradually adapted to the challenges of developing countries since LUNDRALL's first work in 1985. This concept emphasizes the role of non-market interactions in technological development and the necessary coordination between the fields of education, research and the productive sphere. OECD 2002, OpCit, P OECD, Ibid, P Lundvall.B.A, "National systems of innovation, Towards a theory of innovation and interactive learning", Pinter Publishers, London, 1992, p. 27. Available at: Kapitel3.pdf 68

72Chapter I: Theoretical aspect of innovation According to Nelson, an NIS is a collection of institutions (and institutional rules) whose interactions determine the innovation performance of national firms162. For Lundvall, it was clarified that NIS consists of interacting elements and relationships. in the production, dissemination and application of new knowledge for economic purposes. The term refers to the connections between the actors in an innovation system and the knowledge flows within this system. This is a major conceptual advance over previous writings, which tended to segment actors in their own field of activity and only secondarily question the transference and relationships between them. The equivalence of the term "national innovation system" is credited to Freeman in 1987, who defines it as: "the network of public and private institutions whose activities and interactions initiate, import, modify and disseminate new technologies". The presentation of the concept of 'national innovation system' generally gives rise to perspective on the researchers' different views on the definition of this concept. The three conceptual bases for the IS approach are as follows165: - Economic decision-making rests on an institutional basis. The implication is that different institutional structures lead to differences in economic behavior and in the performance that this behavior leads to. - Competitive advantages (of nations) result from diversity and specialization; It has properties that result in a path dependency. Technological and industrial specializations that lead to rapid growth lead to self-reinforcing phenomena that create systemic effects. - Technological knowledge is generated through interactive learning that creates different 'knowledge bases' according to the agents. These different birthplaces determine the possibilities for innovation. The problem with any approach to IS is to delineate the system and determine the elements to consider when defining IS. Lundvall distinguishes between two different views of SI 166: - The narrow view is limited to the areas of science, research, technology and in some cases education. - The broad view extends to all economic and institutional structures that affect the production system. The narrow view considers only the scientific and technical system as the object of investigation. 162 Nelson R, Institutions Supporting Technical Change in the United States, Pinter Publishers, London and New York, 1988, P Lundvall BA, Opcit P Freeman C, Technology Policy and Economic Performance, Lessons from Japan, Printer Publishers, London and New York, available on the web Darchen Sébastien, Tremblay Diane Gabrielle, "Innovative Environments and the Creative Class: Review of the Scriptures and Analysis of their Application in the Urban Environment", The Canadian Research Chair in Socio-Organizational Issues of the Knowledge Economy, n , P Levesque B, Klein JL, Fontan JM and Bordeleau D, 1996, P9, In: Yvon Martineau, Claire Poitras and Michel Trépanier scientific and technological agglomerations. Synthesis of scientific and institutional literature. Final report submitted to the INRS Urbanization Science and Technology Advisory Board. May 1999, available at: hyyp://acst-ccst.gc.ca/skills/finalrepdocs/17f-s.pdf 69

73Chapter I: Theoretical aspect of innovation Consequences of innovation that lie outside this area. The benefit of this limitation is a gain in precision in the analysis. However, such studies can sometimes question the importance of national determinants for structuring the interaction between actors (and thus for the innovation system). In addition, proponents of such an IS approach tend to downplay the importance of institutions with "macro" or cross-sectoral influence and push for more localized, regional or intra-sectoral channels of interaction. Studying the determinants of innovation naturally leads one to consider influences not necessarily related to science and technology. The transition to the comprehensive design follows a logic of the proximity of the different fields to be taken into account (science, technology, higher education, business administration, etc.), leaving the door open to more or less comprehensive interpretations of the system. According to the comprehensive design, the main assumption is that national structural differences play a role in national patterns of innovation, competitiveness, sector specialization and ultimately growth. In any case, it implies a double consideration: - The first is that technology, or more generally the acquisition of knowledge or skills, is organized very differently from country to country. Therefore, it is possible to make one or more classifications of countries based on the structures of their scientific and technological systems and the way science and technology interact with other sectors of the economy. The second stage is innovation, more generally technical change and knowledge accumulation are the most important factors affecting the competitiveness of companies, industries, regions and countries. So we can say that a NIS traditionally analyzes the following functions: policy development and resource allocation. Regulations, funding, performance, infrastructure for staff development and skills development. 2.5 Dissemination and financing of innovations In order to be able to reimburse the R&D costs as a company, this innovation must be disseminated very quickly and widely and taken up by the market. Managers try to use the diffusion curve to find the best strategy to influence the rate of innovation adoption, both on the supply and demand side. Ugly. The speed of innovation diffusion can vary depending on the nature of the target products; If we take the example of the computer that asked 20 times for 60% of American households to have a PC, it took only 10 years for the Internet to reach the same percentage. Several factors related to supply and demand that the manager can control can affect the rate of diffusion. On the supply side, we can mention the following product functions: 70

74Chapter I: Theoretical aspect of the innovation The degree of performance improvement compared to the existing offer from the customer's point of view. For example, 3G telephony has not delivered sufficient performance gains in most markets to drive rapid adoption. In contrast, DVD replaced VHS very quickly. Compatibility with other elements of the offer. For example, digital television became more attractive when television networks began broadcasting in this format. Compatibility with existing offerings can also facilitate adoption: digital televisions would have sold much less if they had not been able to receive analogue broadcasts. Complexity should be kept to a minimum for the consumer so that he can ideally retain most of the habits he has developed as a user of the previous offering. You must also make sure that it is easy to get information, place an order or ask for help. Very often, new investment or insurance products unnecessarily scare customers because of their complexity. Experimentation, i.e. the opportunity to test the offer directly before purchase or via testimonials from other customers, can promote diffusion. For this reason, advertisements for new products often highlight satisfied customers or recommendations from celebrities or experts. On the demand side, the following factors influence the spread rate: Communication is a requirement. Many potentially successful innovations failed because customers were not sufficiently aware of their existence, especially when innovators' communication efforts were limited to advertising campaigns with their distributors. The installed base may create a good cycle depending on its size. The basic idea is that no one wants to be alone in adopting a new technology, and on the contrary, everyone is reassured by the purchase of technologies that are already successful: current adoption encourages future adoption, lack of adoption deters potential customers. Therefore, it is important to ensure a wide dissemination of innovation already in the launch phase (hence the significant budgets for the launch of new video game console models) or to convince customers in a more subtle way that innovation, even if it is a pioneering act a simple further development of an already widespread assortment is justified. consumer behaviour. The behavior of pioneer clients (innovators) differs from that of latecomers (conservators), but the latter's behavior is greatly influenced by the former's. This means that innovators (often the youngest and most affluent customers) should generally be targeted first to build the critical mass that will encourage the more conservative (usually the older and less affluent) customers to adopt the new offering as well. Innovations that target latecomers from the start are more likely to spread more slowly. In any case, product launches should be orchestrated with great care, especially if you're both 71

75Chapter I: Theoretical aspect of innovation, attracting new customers without losing existing customers: it is about seducing some without disturbing others. These different factors should make it possible to influence the speed at which an innovation spreads, which is usually not constant. All these criteria represent key factors for managers to convince the manager to take the opportunity to finance an innovation project. So it must be shown how the performance gain is valued by customers, the level of compatibility with other products or services, the commercial approach used to inform the market and the initial objectives that can be used to convince all customers. Figure N 15: The diffusion curve of innovation Source: Adams R., Bessant J. and Phelps R., "Innovation Management Measurement: A Review", International Journal of Management Reviews, volume 8, N 1, p. 21. This curve is not always applicable to the diffusion of innovations, we can also find the Roger curve, which we will discuss later. According to this curve, and according to the author, managers can use this curve as a tool to anticipate specific problems. Four key decision metrics are identified: The tipping point. Launching an innovative product can be very difficult when demand is very low until the business reaches a tipping point where it suddenly explodes. The tipping point in network effects is particularly striking. This means that the value of the offer increases in proportion to the number of users, i.e. if the value of the offer increases with the number of users. , the best example we can mention is SMS, which underwent this kind of transition when enough users started exchanging messages, the others were interested. Identifying a tipping point can help managers make investment plans, determine a production level, or plan a sales strategy. Companies tend to underestimate demand. The expectation of the plateau. This curve warns managers that demand is always slowing. The diffusion curve warns managers of 72

76Chapter I: Theoretical Aspects of Innovation The fact that demand growth always slows. So it is more interesting to talk about the current growth, especially if it is high. If the company decides to invest in the development of its production just before the demand decreases, it can have serious consequences for the company. The size of the spread. The basket does not necessarily lead to all potential users accepting the offer. Most innovations cannot completely replace the existing offer. Managers must therefore be able to anticipate the maximum spread point, taking into account that growth will typically not extend to the entire potential market. The breaking point. This phase is the opposite of the first phase, meaning the opposite collapse of the slope. The presence of network effects can mean that the loss of a few customers can lead to massive shutdowns 167. Such a phenomenon is very difficult to reverse. In summary, we can say that the diffusion curve helps the company not only subtract next year's revenue from last year's revenue, but also shows that the diffusion of innovation is not a linear process. Successful innovation can be interrupted or frozen at any point on the curve, where there are innovations that do not even end at the tipping point, let alone the tipping point (collapse). In his book "Diffusion on Innovation" from 1962, the American sociologist and statistician Everett Rogers ( ) developed another theory about the diffusion of innovations, which is used as a reference to this day. Although it is relatively challenged by examples of recent radical innovations such as the mobile phone, it still has great significance as a theoretical model that can be applied to most people. For this work, Rogers is interested in the life cycle of an innovative product on the market. He is interested in understanding the time it takes for an innovation, however revolutionary, to reach the market. The main appearance of these works is explained by the curve developed by Rogers, which serves to explain the spread of innovations through a relatively empirical figure. 167 Everett M. Rogers, Diffusion of Innovations, Fifth Edition 2003, free press available at: strategy4innovation.wordpress.com/2009/.../la-diffusion-dune-innovation 73

77Chapter I: Theoretical Aspects of Innovation Figure 16: Rogers innovation diffusion curve Source: Everett M. Rogers, Opcit, website “The Rogers bell curve or acceptance curve represents the different consumer profiles that an innovation must convince in order to spread through society. These profiles are 5 in number and have very different expectations of each other. The most notable differences are between the first two categories: innovators and early adopters on the one hand; advanced and lagging majority, then the backward on the other side. In fact, we are moving from consumers who are sensitive and enthusiastic about innovation to others who are more rational, want concrete evidence of performance and wait for a technology standard to be chosen. Figure N 17: Diffusion of innovation Source: Everett M. Rogers, Opcit, Website 74

78Chapter I: Theoretical aspect of innovation On the other hand, the innovation diffusion cycle is not continuous and the transition from one consumer category to another is not automatic. The discontinuity in the process is related to the different expectations of the types of consumers who buy the new product for different reasons. Mass This curve is of particular importance in terms of product marketing, given the cutting edge "innovative product" aspect that consumer goods lack. The whole challenge of an innovation is to enter a mass market through the niche market (product with confidential distribution reserved for e.g. tech-savvy or wealthy customers), where the distribution of the product allows a price reduction as a second step. To bridge this point, which Geoffrey Moore calls 'the gap', consumers must be convinced of the value of innovation. As much as early buyers are attracted by the mere "novelty" aspect (the latest product in fashion), later consumers will want to see the added value of the product. The analysis of the transition of this gap, which is crucial for the success of an innovation's diffusion, made it possible to identify five innovation-specific criteria that make it possible to explain the success or failure of an innovation169: "The relative advantage ." corresponds to the consumer's perception that the innovation is better or more effective than existing solutions. This "performance" is measured by the innovation characteristics that are important to consumers, such as financial gain or social prestige. This factor is closely linked to the specific perception and needs of each individual consumer group. The innovation's compatibility with potential consumers' existing values ‚Äč‚Äčand practices also affects the degree of adoption of an innovation. It corresponds to the degree of alignment between the values ‚Äč‚Äčand practices of potential consumers and those necessary to exploit the innovation. The innovation's simplicity and ease of use, as perceived by potential consumers, can also be a brake or a catalyst for its adoption. In fact, an innovation that requires learning spreads more slowly than an innovation that does not require the development of specific skills. The opportunity to try the innovation can facilitate its adoption by users, encourage word of mouth and reduce the associated uncertainty and therefore risk. The observability of results is also a decisive factor in the dissemination of innovations, as it makes it easier to demonstrate the benefits of the innovation. Results that are visible to potential consumers reduce perceived uncertainty and promote word of mouth. The weakness of the model is that it is again a non-predictive statistical explanation: the innovation that combines these five characteristics has every chance of success, but nothing is 100% guaranteed. In addition, some commentators argue that consumer behavior is not easy to categorize and largely depends on the relationship between their current needs and the innovation in question. Finally, this model does not take into account the phenomenon known as "path dependence", which occurs when a standard is widely adopted for a product: the massive diffusion of a standard prevents the emergence of a new standard. 168 Docter J., Van Der Horst R. and Stokman C., Innovation processes in small and medium-sized enterprises, entrepreneurship and regional development, N 1, 1989, P Opcit, S53. 75

79Chapter I: Theoretical aspect of the innovation The subject is the PC keyboard Azerty or Qwerty: heir to the mechanical limitations that apply to typewriters (obviously not present in PCs) The spread of this standard has meant that no competing model in has been able to develop it, although it offers a large number of alternative solutions (Dvorak keyboards for the most famous). B. Financing of innovations In general, the company has four types of financing to ensure the payment of its projects: either it uses the resources it generates, i.e. self-financing, or it resorts to other financial intermediaries such as the bank, what debt means, that either it develops its capital by issuing securities on the stock exchange or even seeks the help of the government or private actors to produce and disseminate innovations 170. According to the author, R explains. Beaudoin that the company has various government programs at its disposal. To finance innovations, these are divided into three categories. Direct capital injections: In general, capital injections and government loans are the means most often used to increase capital risk in an economy. In this case, the state can invest in private venture capital firms or set up its own venture capital fund. - Financial incentives: Most governments in the OECD area guarantee loans from financial institutions to small businesses. In the event of default, the Lender's damages are limited to the credit amount not covered by this guarantee. In this case, banks are strongly encouraged to finance small businesses with viable projects, but which cannot always meet the loan obligations normally imposed. - Tax incentives: Governments can also introduce tax incentives to reduce the cost of high-tech investments. The most common of these tools are tax breaks for investors. 3. Innovation and risk 3.1. Risk definition and typology Risk is a ubiquitous concept used in all fields and associated with all adjectives such as technological risk, environmental risk, health risk, vulnerable population. So what do we mean by the word risk? According to Larousse's classic definition, risk means a danger, a more or less probable disadvantage to which one is exposed 172. According to Giard, risk is a subjective construction that is not always probable 173. Several authors are interested in this 174 In the question of risk, can we Schumpeter J.A. quote that championed the role of the entrepreneur in assuming the risks associated with innovation. He explains that the entrepreneur is considered to be the driving force behind the activities of the French Ministry of Industry. Financing technological innovations. Structural uncertainty. Funding sources for innovation. Map 2 Synthesis. French Ministry of Industry. Available at < (accessed 2013-06-24). 171 Robert Beaudoin and Josee St-Pierre. Financing innovation in SMEs: a recent literature review. Department of SME Research, University of Quebec at Trois-Rivières. Monitoring report submitted to the Observatory of Economic Development Canada. October Available at < (accessed 28-04-2013). 172 Larousse Giard V Dictionary, "Project Management", Economica Edition, 2005, P Arbaoui K, Opcit, pp. 59,76

80Chapter I: Theoretical aspect of economic innovation, with the following compromise: By innovating, the entrepreneur simultaneously takes economic, technical and financial risks, his goal is to create wealth and jobs. For his part, Knight175 relied on the risks associated with uncertainty in production management. He mentioned that there are two types of risk, the first is called insurable risk, which is likely to occur and can be insured against, the second is related to uncertainty, where the company has to make several sequential decisions (who produces? unit). , at what price?). On the Keynes side, J.M. the effects of uncertainty on the behavior of economic subjects are central to his concerns. For him, the timid behavior of the entrepreneur promotes the spread of economic crises (outsourcing of threatened activities). Faced with market uncertainty, the entrepreneur prefers to limit his activity176, which may lead to redundancy and closure of some of his production units. According to Fimbel, he explains in his book that risk and responsibility in an organizational sense are permeated by the ambiguity of the concept of risk. Only systemic approaches allow progress in the understanding and management of risk 177: - The singularity of the risk moment - The interaction between economic, political, media and social actors and groups - Cognitive distance between those responsible - Violation of the activity "The intelligence of a modern and global risk management lies essentially in the ability to understand the multiple and systemic interactions and interdependencies between actors, moments and productive processes.‚ÄĚ178 After presenting some definitions of risk, we present below its typology in order to make a certain classification into homogeneous and mutually exclusive classes, which makes it possible to group events in order to process the information statistically.According to this classification, the considered risks depend on the selected entry points: - fact or event - consequence or damage (bodily damage, destruction of property.) - place of event. - The causes (incompetence, technical failure etc.) - Gravity signalling. Depending on the subject, the context and finally the approach, a very broad risk typology can be presented. According to Miller, risk in management science is presented in the form of three main categories 179: - risk related to the company's activity - risk related to the company's environment (internal or external) - risk specific to companies 175 Frank Knight's theory in the year 1021 in his book Risk, Uncertainty and Profit 176. Social risk of job loss: one of the main limitations of capitalism. 177 Fimbel E., "Responding to changes in the business environment", Frans Notebook, N 321, P Arbaoui K., Opcit, P Maryhofer, "Risk Management and Forms of Approach", Frans Management Review, Nov-Dec. 2000, p

81How do I prevent slipping? How can operational risks be reduced? Chapter I: Theoretical aspect of innovation In other studies, it seems interesting to distinguish between two types of risk: operational risk and global risk. Operational risk relates to any process or step. Examples include the risk that technological barriers arise during development, that the innovation is not accepted by the market, or that the economic model is not validated. Total risk is defined as the eventual failure of the project. By failure we mean that the outcome of the project is different and/or less favorable than what the management team had in mind at the start of the project. For example, a bankruptcy petition can be mentioned, but also an industrial exit instead of a stock exchange listing, which results in a smaller capital gain than originally planned. In terms of typology, we are interested in the former in relation to the context of our research. Depending on this characterization of the risks, the sequential and simultaneous modes have both a reducing and a generating nature of risks. To manage operational risks step by step, sequential development seems to be best suited. However, each step does not guarantee the completion of the next step, and the ultimate success of the project is not guaranteed. This is all the less true as the demand and consumption of resources increases at each stage and the lack of income delayed over time increases the deficit and the risk of bankruptcy. The success of the project lies in the company's ability to raise new funds at each stage. The capacity is all the more uncertain because financial organizations are susceptible to fad effects.180 Conversely, given the complexity generated, the simultaneous mode does not a priori contribute to reducing individual risks, but on the basis of the preceding arguments it should lead to reduction of individual risk. risks the project's overall risk level. Figure N 18: Project development status and increased risk management Simultaneous development How do you prevent slippage? Risk maximization Reduced operational risks Risk minimization How can the overall risk be reduced? Sequential development Reduces overall risk Increase Source: Franck Moreau, Opcit, P Moreau F., "Understanding and managing risk", Organization edition, France, 2002, pp. 15-78

82Chapter I: Theoretical aspect of innovation This model summarizes our main propositions: - Co-development will reduce the overall risk, but increase the risks specific to each operation. - Sequential development will reduce the operational risk, but increase the overall risk. Two questions then arise: how can we avoid the derailment that, in any form of development, would increase the risks it would actually reduce and definitively endanger the project? Depending on the type of development being undertaken, how can operational risk or overall risk be reduced? Without taking risks, we cannot say that the entrepreneur, as an important player in the development of his business, will play a key role in light of these problems. With regard to risk management, the type of development chosen will be important. Also remember that there is another development mode that protects the different parts of the project as well as the whole. On the one hand, we can assume that this situation is too ideal, even utopian and too far from an innovative, fast-growing business project, valued for the risk associated with its activity. On the other hand, we can imagine what we could call a side-by-side development mode, where flows are pre-developed and combine the advantages of sequential and simultaneous modes in terms of risk reduction. Several authors have confirmed that there is a strong tension between innovation and risk-taking. Given the corporate culture, values ‚Äč‚Äčand compliance with the rules, the risks of innovation take different forms, after which the importance of risk management is confused with the importance of risk avoidance, and this implies a fear of innovation (avoid innovation) . In the first chapter we also mentioned that innovation involves change that requires risk-taking, mainly related to commercial, technical and financial uncertainty. Assessment of the risks of an innovation is seen as the most critical phase in relation to the assessment of the innovation itself. In this section we therefore present the risks associated with the innovation. 3.2 Specific risks: Under the global system innovation approach, the risks are weighed against the essential aspects of the company's existence, namely: strategy, finance and organization. Ugly. Strategic risks: In general, innovations have a limited relationship with uncertainty and risk, both in their process and in their results. Innovation is thus based on risk and generates it. This means you have to take risks to innovate. Regardless of the innovation strategy, they are of different nature and to varying degrees depending on the type of innovation project. To innovate effectively, the company must first have a global vision and be able to assess the technical and economic impact. In addition, it is important for the company to assess what level of risk is compatible with its organization and resources. 79

83Chapter I: Theoretical aspect of innovation Risk related to the choice of an innovation project: The specificity of innovation projects lies in the fact that we do not necessarily know the technical and human requirements necessary for the project to run smoothly, and therefore also the risks. involved are involved. are unknown. If a risk analysis of a project is not systematized, a continuation of the activity can therefore have serious consequences for the completed organization. It is therefore about mapping all possible project scenarios and selecting the scenario with the lowest risk. Monitoring and technology monitoring make it possible to maintain the connection with the environment of the organization responsible for the project, to respond to or even anticipate new risks. Another risk to consider is making the right project choice. This type of risk is known as a strategic management failure. To avoid this type of error, the selection of an innovation project must be based on the answer to a technological need, a very specific need, taking into account the following limitations181: The intensity of the competition The technological level The available resources To reduce the risks, The need for skills, a certain experience, an intuition, a precise strategic vision ... is necessary. In the face of uncertainty, risk-taking emphasizes two elements that drive commitment to change: good governance and strategic alignment. On the one hand, the latter also reflects the degree of support for innovation and change through the fault tolerance and management possibilities that permanent innovation can provide to achieve a certain capacity to become a learning organization. On the other hand, they differentiate organizations based on their size, expressed in terms of flexibility, rapid decision-making and limited resources. 182. Risk associated with ill-defined objectives: Achievable objectives are as important as well-defined objectives. To clarify expectations, the outlined goals for an innovation project should relate to the following aspects: quantity, cost and time. Projects that take more than a year to complete are generally considered high-risk projects. 183. Risk associated with the entrepreneur: Several studies have confirmed that the entrepreneur can pose a risk to the innovation project, and this is generally related to his attitude to risk, his willingness to deal with financial partners or not. B. Economic risks: If the costs of the innovation turn out to be too high, the expected economic benefits will not be realized. Low self-financing capacity and/or refusal of external financing will also undoubtedly lead to the project becoming abundant. Three types of innovation-related risks can directly affect the company's portfolio. 181 Arbaoui Kheira, Opcit, P Tidd J, Bessant J and Pavitt K, "Innovation Management", Edition De Boeck, 2006, P Arbaoui Kheira, Opcit, pp. 73 80

84Chapter I: Theoretical aspects of innovation Financial risk: The degree of uncertainty that characterizes any innovative project makes the expected return on investment uncertain. This uncertainty is due, on the one hand, to the characteristics of the project and, on the other hand, to the imperfection of information caused by the constant interactions between the company and its environment. These elements should be considered before trying to explain the financial behavior of all firms, especially those in the high-tech sectors and especially those with high risk and limited access to external finance. We know that venture capital is one of the special forms of financing for companies that do not have money, be it in the start-up or development phase or in the decline phase. Certain actions can reduce the severity of this type of risk. We can mention the following184: Assess the costs of innovation in a new product through a patent. Commercial risk: This risk is generally related to the market reaction during the integration, the difficulty in obtaining sufficient sales, distribution problems, fluctuations in demand and partnership problems. A marketing approach is required to minimize and control this. This risk is present throughout the innovation process and is based on: conducting market research, conducting surveys, in-depth assessment of the competition (current and potential), developing a commercial strategy. Legal risk: The company that fails to protect its innovation also poses a significant risk. This protection can take the form of a contract, the latter usually found in IT, maintenance and technology partnerships. C. Organizational risks 185: This category of risks is related to the interactions between the members of the company and the external stakeholders and highlights the importance of a rather neglected parameter, the ignorance of which leads to terrible dysfunctions in the management of the organization. is performed and will result in failure of any action that does not conform to the rules. This parameter is related to the degree of professionalism of the innovation activity in the company. At this level we can mention three types of risks. Organizational risk: The integration of innovations in the company leads to destabilization due to new working methods and new management tools, and this can slow down the process in SMEs‚ÄĚ, Monitoring Report submitted to the Economic Observatory, 1999, P. Beaudoin R & al. ., Opcit, p. 100 81

85Chapter I: Theoretical aspect of innovation Innovation. For this purpose, the company must face the severity and it is imperative to check it by analyzing certain measures such as: Maximum motivation of the employee. Dissemination of information between the company's employees in a massive and symmetrical way, norms and regulations, but in a continuous dynamic, taking into account changes and innovations considered societal. 186. To develop in a dynamic of overall quality, improvement and accumulation of knowledge and know-how (knowing how to communicate, knowing how to produce, knowing how to work). safe etc.). Management risk: Management is directly related to the organization. Therefore, this type of risk is generally accompanied by the previous (organizational) risk. It is based on a lack of management knowledge on the part of management and incompetent employees in finance and accounting. Added to this is the lack of appropriate management tools and especially the weakness of financial control. Technical risk: This type of risk falls into two categories. The first concerns men and their know-how. The low level of experience of the staff generally leads to a high risk to be taken. For this purpose, the company employs qualified personnel. The second has to do with the technology: the newer it is, the bigger and higher the risk. This explains why innovative projects using new technologies are riskier than projects using a technology that is already known. In order to manage and reduce this risk, it is necessary to: employ qualified personnel, undergo continuous personnel training, perform good faith testing and fault tolerance, cooperate with the external environment such as design firms, consultants and innovation centers. To summarize, we can say that innovation is a relatively complex process that, in order to properly identify and evaluate it, should consist of the following main characteristics: the type of innovation, its life cycle and the intensity of the change it produces. Innovation. Type: Allusion to innovation in the process or in the products/services. Knowing that innovative projects related to processes and products are generally considered more risky, as they often involve intangible assets (purchase of patents or licenses, research of information, etc.). The life cycle usually consists of four phases, namely: research and development (project feasibility, demonstration, implementation), market introduction (pre-commercialization, industrialization and market introduction), growth (technological risks have also largely disappeared). as the commercial risk is much lower) and finally the maturity phase (the commercial risk will increase with the emergence of competitors). The last phase is usually the shortest, because the life cycle of high-tech products in particular is getting shorter. 186 innovation that realizes a double economic and social achievement. 82

86Chapter I: Theoretical aspect of innovation. The intensity of change: explains the degree of change resulting from innovation. We can say: radical, systematic and incremental innovation. A series of small, more or less incremental innovations, the sum of which allows a company to differentiate itself from its competitors, is less risky than a major innovation that risks being quickly imitated by competitors. Innovation risk management: The lack of cultural risk can lead to organizational complexity that is detrimental to innovation in terms of time, finance, technology or personnel. The risk management strategy should therefore reflect the innovation strategy. 188. Ways of managing risk According to the risk management literature, we distinguish four ways of managing and dealing with risk 189: Figure N 19: Risk management Accept the risk when the cost of eliminating it is too high, which consists in doing nothing about it to take risk. Two circumstances are likely to lead to this decision: either the risk should be neglected or all other options are deemed too expensive. Risk transfer Risk reduction What is common in insurance, risk sharing through partnership, outsourcing or internationalization. Two practices are outsourcing* or purchasing insurance. In introducing new security measures, two practices are likely: either reduce the impact once the risk has occurred (cost/impact), or minimize the likelihood of an incident by continuing with ongoing staff training and securing funding. conditions for their realization, so that the risk no longer arises. For example, the refusal to launch a new product when the company does not have the infrastructure to handle it, fierce competition, fluctuating demand... Managing innovation and managing risks is a strategic matter for the company. Innovation is about turning inventions into tradable products (valued by the market) and doing it in a short time (approx. (risk of being overtaken by competitors), with sufficient quality (with risk of the customer turning away).) acceptable costs ( so that the company benefits from its product). Risk management consists of three now classic steps190: 187 Beaudoin R, et al. Opcit, P Blondel Frédérique and Gaultier Guillard Sophie, "How can a company manage risk?", vie & science économique, N 172, 2006/3, P Outsourcing means transferring responsibility for human and technical resources to a third party. The latter will be interested in considering the risks of these resources and the choice of threat options. it is very important to finalize the clauses of the service contract that binds the company to its service provider 190 Arbaoui Kh., Opcit, P

87Chapter I: Theoretical aspect of innovation. Risk identification: makes it possible to make a comprehensive list of all events that can affect the correct functioning of the innovation. Evaluation of the possible effects of risks: The risks are classified according to the seriousness of the consequences and the probability of each hypothesis occurring. Therefore, the risk assessment must lead to the identification of the actions that must be prioritized in order to control the risks that one is exposed to as much as possible. In fact, the process to be followed is summarized as follows Figure 191: Figure N 20: Risk assessment Identification of sources of danger per unit Definition of human exposure Determination of risk situations Quantification Measures already taken Prioritization Deviation / Regulations Action plan Abbreviation Risk reduction Priority of work units for economic activity Source: Barthélemy B ., Courréges Ph., Opcit, P173 Risk Assessment. All possible applications of the results of a risk assessment are shown in the following graph: 191 Barthelemy B., Courreges PH. "Risk Management, Global Optimization Methodology", 2nd Edition, Organizational Edition, 2004,

88Chapter I: Theoretical aspect of innovation Figure N 21: The results of a risk assessment Action plan Training material Training plan Processing Planning Risk assessment Prioritization Identification Analysis Quantification The risk assessment thus includes the following steps: analysis (hazard assessment and risk identification), risk quantification, prioritization of risks, planning their treatment ( action plan) and the treatment itself Job descriptions, procedures, workplace training scorecards, work audit materials, Source: Barthelemy B. and Courreges PH., Opcit, 174. Risk treatment: preparation of an action plan based on the company's priorities (according to the risk matrix prepared in the previous step). Further development of a strategic monitoring, in particular to verify the applicability and monitoring of the recommended treatments. So we can say that reducing risk means designing the project wisely and investing effectively. By combining these two parameters and taking sequential actions, it is possible to reduce the risk very effectively. However, the selection of the right option emphasizes a decision-making process based on two principles: Cost calculation Cost / Effectiveness: Each chosen option has two characteristics: A representation of some implemented cost, which usually consists of a recurring fraction or a punctual fraction. Also enables risk reduction, either by reducing the likelihood of occurrence or by limiting the impact of a threat. All these elements can be quantified to make comparisons. Risk mitigation calculation: In general, risks are often expressed as the average annual losses in an activity that may endanger its continuity. 85

89Chapter I: Theoretical aspect of innovation The following table presents different risk management options according to different decision-related statuses: Table N 6: Choice of risk management option, risk sources, control option, category How? Decision situation Security Purchase of new equipment S: Management error Uncertainty Conquest of a new market. S: Missing/failure in information system Ignorance Installation of new computer version S: Badly adapted skills. Participate in competition to promote competence. S: Interruption of organizational communication. Inventory risk management in connection with discontinuous production. S: Lack of inventory 3.4 Principles of risk assessment Compare criteria Define marketing structure: Competition/demand Adjust technical skills Mass motivation Score target Just-in-time production Source: Arbaoui Kheira, Opcit, P81 Reduction. Transfer. Reduce. to avoid. Reduction MCAG 192 MKG 193 Information monitoring Train a priori Reduction Establish a culture of sharing and pooling Accept reduction JAT 194 RO: Wilson Model An approach based on a systematic approach is considered to analyze the risk of not controlling it, not avoiding it, evaluating and ultimately check it. Such an approach makes it possible to collect all relevant information for decision support in relation to risk reduction. To assess the risk, several elements were identified by referring to the concepts underlying the risk: 195 Hazard: Source or situation that can lead to harm or damage to health, property or the environment, or a combination of these elements. Consequence: Impact or consequence of hazards on personnel, equipment, property. Probability of Occurrence: assessment of the likelihood that hazard injuries will occur. Severity: Estimation of the seriousness of the consequences resulting from the identified hazards. Risk: combination of the probability and consequence of a particular hazardous event occurring. Risk Control: Preventive actions to be taken to eliminate or reduce risks to the lowest level. Residual risk: level of risk after implementation of the control measures. 192 The equation model applied to management 193 The marketing strategy 194 A management philosophy called 'Just In Time' is used here. Arbaoui 195. K, Opcit, pp. 82-86

90Chapter I: Theoretical aspect of innovation From this we can conclude that the risk of any activity can be estimated by identifying the risk of the activity taking into account both its severity and probability. The main elements that ensure that opportunities are exploited are several factors. Internal or external actions related to the company's environment can be sources of opportunity for the company by providing opportunities to invest in profitable areas. Ugly. Identifying the need for innovation: As we outlined earlier, innovation is necessary in a globalized context that requires more competitive standards that every business must meet to withstand the ever-increasing competition and interconnectedness. Within innovation, different needs can be identified, below we present the most important ones: o Continuity: this means acting in a continuous dynamic, taking into account changes that are considered to be social. Remember that growth is the goal of every business. o Competitiveness: Strong competition forces the company to expand and improve its business, leading to an increase in revenue, a strengthening of the competitive position, the acquisition of additional market shares and an improvement in margins. It also makes it possible to keep trade and know-how under control and to anticipate the customers' new needs on a national and international level. o Economic rationality: The company tries to optimize its costs through data innovations that can improve value for money. To this end, the company may be fully or partially involved in the process of total quality management, a series of gradual innovations in all areas of the company. On the other hand, the company may have social needs in relation to innovation (socio-economic), which can be summarized as follows: o meet the increasingly demanding needs of consumers o alleviate unemployment o improve lifestyles o respond to specific global problems such as health and environment 196 b. Identification of sustainable sources of innovation 197: Identify societal trends that can be sustainable sources of innovation. Several concerns can shape the innovation agenda in terms of sustainability, we can mention: o pollution and pressure to produce less polluting products, o threats from climate change and global warming, o limitation of energy and pressure to identify other renewable alternative resources 196 OECD, Innovation and Growth, Synthesis, November Arbaoui K, Opcit, P90. 87

91Chapter I: Theoretical aspect of innovation o Population growth and urban concentration o Health and related issues related to basic health standards such as care, drinking water, public hygiene. These themes can be a sustainable source of innovation by offering opportunities to invest in the following activities: New products and services, new processes, new major markets based on sustainability, new distribution methods 198. c . Overcoming barriers to creativity: Especially in connection with permanent changes, being able to respond creatively is a real asset. To overcome the factors that block innovation in the company, it is first necessary to create an internal environment that encourages creativity, rely on stimulation techniques, but also know how to distinguish between what is done and what is not is decided. These brakes can be classified from two points of view: - Individual brakes: when you talk about the individual, you immediately think of their psychology, which is sometimes an essential element of innovation and is related to a fear of change, which can either refer to. to the fear of failure or the fear of success. To overcome the first obstacle, the entrepreneur must turn the vision of failure into a positive one and tell himself that failure is the best way to learn and grow and see failure as a test. The second brake has to do with a lack of confidence and being in a situation that is out of your control, causing you to lose some sense of calm and safety. - Collective brakes: These are strategic, financial and organizational brakes. o Strategic barriers: Indication of the company's position in terms of innovation. The best and most convenient place in this regard is the place of the follower, as it can closely monitor the innovative venture taking the risk. This function is able to identify both the success factors and the reasons for failure and avoid the other company's mistakes as much as possible, which improves the entrepreneurial approach. The patent also represents the classic defense that enables the innovative company to protect its innovations, but not in the service sector, as service innovations are not patentable. o Financial barriers: This is linked to a lack of resources related to the company's innovation ambitions. They are expressed in terms of time (unproductive time causes costs that can affect the company's portfolio) and material investments (significant investments without guaranteed returns). o Organizational obstacles: these are the most common and the hardest. We can mention the following reasons: aversion to innovation, subordination of innovation, overestimation of innovation, overselection of ideas, corporate culture, isolation, lack of curiosity, fear of experimentation, cost reduction. All these elements are generally caused by the lack of proper diagnosis, or therefore it is important to prepare and manage these brakes, either by the company itself or by a consultant. 198 Tidd J, Bessant J, Pavitt K, "Innovation Management", De Boeck Edition, 2006, pp. 50-88

92Chapter I: Theoretical aspect of innovation d. Strengthen the techno-strategic overview: This means positioning yourself against existing patents, new technologies and against the competition. There are four types of independent monitoring199: o Technology monitoring: This consists of anticipating technological changes, discovering technical innovations and promoting the company's research and development policy. The aim is also to identify the products and processes as well as the technologies used by customers, suppliers and competitors in order to monitor and realign market developments in accordance with these changes and implement occupational safety procedures. o Competitive intelligence: It tries to identify current and potential competitors and helps to organize according to their strengths and weaknesses. The goal is to know exactly which strategy the competitors have chosen and to anticipate their actions. o Business surveillance: It is primarily interested in the company's customers and suppliers, as well as the sub-suppliers and partners who act as a source of information between the consumer and the company to meet their needs and wishes. o Environmental monitoring: focuses mainly on the external environment such as politics, culture, society, etc. All these types of monitoring are related to the concept of information or information monitoring, which consists of collecting information from various sources, analyzing it and then structuring it. that. internal sources such as company knowledge, experience or external sources such as research centres, networks, fairs and exhibitions, market research. The information must be collected and then filtered and structured. These operations must be followed by an innovation process that can crystallize and take shape on the basis of the company's strengths and weaknesses (internal environment). e. Formalize communication: It is interested in formalizing the way of communication to be credible and effective both internally and externally. o Internal communication is generally aimed at weaving and maintaining coherence among the members of a group around their spirit, calling, raison d'être, ethics, actions, development, policies, commitment. This alone is not enough, because in order to be effective and highly visible, it must be done in continuation of coordinated and shared management. So it's about creating a sense of belonging to improve the overall functioning of the company. To make this communication a lever that encourages and supports innovation, several factors must be taken into account such as education, safety, etc. o External communication: All communication mainly aims to convince the consumer and differentiate him from his competitors. To this end, the company wants to strengthen its brand based on three essential elements: quality, responsibility and innovation. 199 Arbaoui K, Opcit P Ziar N, "Analysis of export capacities of SMEs in Algeria", Master's thesis in finance and economics, University of Oran, supervision by Pr Bouyakoub, 2000, p. 31. 89

93Chapter I: Theoretical aspect of innovation Communication can take different forms: commercial, social or institutional communication. F. Validation against societal needs Validation is the process of confirming, through testing and objective documentation, that the requirements for an intended application or use are met (ISO 9000). In other words, the verification activities ensure that the definition corresponds to the state of the art 201. Validating the innovation in relation to societal needs here means making assessments, evaluating and comparing the results. with the socio-economic objectives, which ultimately enriches the experience base 202. Conclusion In conclusion, we can say that the concept of innovation is polysemous and can be understood in different ways, depending on which angle of analysis we wish to refer to. Explicitly or not, most innovation work relies on a process-related representation of innovation. Economists, evolutionists (especially Nelson and Winter, 1982, Dosi, 1988) and sociologists (Callon M. and Latour B., 1988, Callon M) all agree on this point. This process involves interactions between different actors. We can also say that innovation is seen as technical progress, it was an imprecise expression and of limited scope. The company therefore had to be equated with a black box (the black box is a general term denoting a linear process that combines inventions on the one hand and innovations on the other) and its growth was subordinated to the acquisition of new goods. and equipment. One of the basic features of evolutionary analysis is to look at innovation as a process. C Freeman (1982), an economist known for his work on innovation, goes back to Schumpeter and presents innovation as a process, in contrast to orthodox economic analysis, which is not specifically interested in the process of innovation, but rather in innovation or technological change. . as a black box, evolutionists emphasize the process of innovation as the basis of technological dynamism. and macroeconomic dynamics through their impact on growth and other economic phenomena. Different reflections on the question of the relationship between institution and innovation have arisen, mainly with the aim of emphasizing the role of institutions in the dynamics of innovation. As we have already indicated, there is a wealth of literature on innovation, and what we have just mentioned is only a small part. Innovation is thus a concrete process that must be planned, feasible and adapted to the company's needs. In conclusion, to approach the first fundamental concept of our study "Innovation" in this first chapter, we can say that in order to survive or develop, companies must be able to create value and introduce innovations in all aspects of their Corporation. management, their processes, their products or services, as well as marketing and their business model. Innovation is the means to achieve strategic goals, improve competitiveness, differentiate and create value. 201 Arbaoui K, "Price and consumption of certain products", Master's thesis in commercial sciences, University of Oran, supervised by Pr Bouyakoub A, 2003, P Ben Ahmed W, "Qualitative Approach to Validate Innovative Products", available on the website 90

94Chapter I: Theoretical aspect of innovation to stay competitive. To do this, they need to organize themselves to carry out their innovation projects and manage risks. We have two important thoughts: Innovation is necessary: ‚Äč‚ÄčInnovation means implementing a change in a product or service, in the production process, in the organization of the company, in the marketing method. So innovation is not just about advanced technology. 91

95Chapter 2: Overview of determinants and key factors driving innovation. Introduction Today, innovation activity in companies goes far beyond the simple technological component and involves production processes, work organization and methods of managing the precious and volatile capital of human skills. As author Phillipe De Woot explains, "The basic logic of business is change." Forms of organization, management, the quality of the institutional environment are essential elements. From this perspective, innovation systems represent the place where the essence of innovation dynamics takes place. The term National Innovation System NIS thus describes the phenomena of innovation within the framework of social and economic institutions. Finally, there is extensive literature that gives a territorial dimension to innovation, analyzes local structures and brings together companies and scientific institutions. These are local innovation systems that can be referred to under different names: neighbourhoods, clusters, innovative environment. The prerogative of the inventor, the risk-averse entrepreneur, the up-and-coming venture capitalist or the resource-rich company. On the contrary: innovation draws its resources from an agglomerated and synergistic social structure that is summarized in a technological innovation infrastructure. 204. Therefore, our work in this chapter consists of presenting and developing the determinants of innovation and some key factors that can have a significant influence on the company's innovativeness. Section 1: The determinants of innovation Second, we present the presentation and development of the determinants of innovation, which we have divided into three main categories of determinants, namely the organizational determinants, which are the responsibility of the company and its management culture and innovation practices. . the institutional determinants by emphasizing the role of institutions in the innovation dynamics and in this case public innovation policies, and in the third phase the geographical determinants, where we will emphasize both the role of territorial innovation systems and forms of neighborhood innovation. 1. The organizational determinants of innovation 203 De Woot PH quoted by Volpi R. in 'Integrating Externalities, the Company Against Change', Cahiers d'économie de l'innovation. Round Tables "Innovation Management", 23./24. January 2003, P Feldman and Florida, cited by Fujita M. and Thisse J.F. in "Economics of Cities and Localization", edition De Boeck et Larcier S.A 2003, pp. 337 92

96Chapter 2: Overview of determinants and key factors driving innovation. Today, innovation is no longer the privilege of large laboratories that discover the great technological revolution, the product, the service of the future or the market of the future. Innovation is a rigorous process, a discipline at the intersection of several disciplines (strategy, marketing, design, research and development) characterized by special values ‚Äč‚Äčand characteristics (permanent monitoring, ability to decentralize one's views, fusion of analytical and creative) skills, fusion of ideation and implementation qualities, the ability to take risks, the knowledge to accept and deal with mistakes... Innovation management goes far beyond the scope of R&D teams, it does not originate from technology. new services around a product or service, a new service architecture New ideas for products or services can come from a marketing department or arise somewhere in the company. Firms that are innovative are more likely to be characterized by information sharing, interaction, and decomported operations. They "have in-depth knowledge of both the technical possibilities and the application contexts 205" Hence the following remark: The R&D department is not always the source of innovations, the R&D function is not the only decisive factor for innovations Innovation in the company. But several variables in the company determine the innovation activities (HRM, corporate culture, strategic approach, information system). 1.1 Strategic approach and innovation According to the author, A.D. explains that "strategy consists of setting the goals and the basic principles." To identify an organization's long-term goals and then select procedures and allocate resources to achieve those goals. Therefore, every strategic approach deals in a sustainable way with the company's future (goals for growth or survival, relation to the environment). In addition, the allocation of resources inherent in the strategic approach requires a quantified approach (precise evaluation of resources) and the existence of options regarding the company's areas of activity. In terms of innovation strategy, it includes general aspects (increasing market share, launching a new product, reorganizing hierarchical responsibilities) and specific aspects (methods of access to technology, patent policy, behavior towards information). and circulation of ideas, choice of procedures). To succeed, the company must seize or create technological opportunities, meet or create viable demand, and ultimately reap the rewards of innovation 207. Innovation strategy means that the company uses specific resources to achieve long-term goals (sustainable competitiveness). on the commercialization of new products, the improvement of existing products, and for certain high-tech sectors they can be technological revolutions (in the case of information technology, biotechnology, etc.). The purpose of the strategic approach is to ensure the company's survival and development, its objectives, its market share, its profits and, more generally, the satisfaction of its various needs and its various partners over a sufficiently long period. koeing G, "Strategic Management, Projects, Interaction and Contexts", Dunod Edition, Paris 2004, P. Chandler.AD cited from Bouvier A.M., Longatte.J & Muller.J, "Business Economy", Dunod Edition, Paris, 2007, P. Koeing.G, "Strategic Management, Paradoxes, Interactions and Learning", Nathan Edition, 1996, P Bellon. B, "Creative Innovation", Economica Edition, 2002, pp. 77 93

97Chapter 2: Overview of determinants and key factors driving innovation. In line with the company's strategy, technology and innovation management consists of setting up financial and human resources, processes such as project management, research planning and routines such as monitoring and marketing surveys, quality. Aiming to combine the energies of inventors, engineers and corporate employees to build and develop a technological legacy (through acquisition, partnership or internal efforts) from which to develop new products and services to create a developmental competitive advantage and sustainably profitable activity through the dissemination of innovations on an identified or created market 209. Today, innovation management does not only consist of managing each individual innovation project by "defining the company's innovation areas, generating innovative ideas, (upstream) projects for the introduction of new products, etc." accompany the introduction of new processes), the technological and marketing resources that feed them, to carry out the selection of projects to be launched, the monitoring of their situation" 210. Innovation management includes: Selection of relevant innovations (financial and technically available) ) Managing skills and resources (internal and external) required for the project Taking into account social and organizational impact (slowness and resistance) Promoting innovation (promoting idea management, supporting project development) According to different authors, innovation management assumes different forms depending on the business context and implements different systems to make employees aware of the importance of innovation, encourage them to express their ideas and share observations about the behavior of customers and suppliers or competitors, and especially encourage the middle and upper hierarchy to value these contributions , respond quickly to proposals, study them or explain why they are not retained, and value innovators 211. In order for the company to draw on the further development of its innovation strategy, it is required to coordinate its goals with technology and R&D management. In fact, it is important to emphasize that technology management is really only part of the system that the company puts in place to support its innovation activities. It is also important to note that technology management goes beyond the scope of R&D because "the technology management literature has long focused on the management of R&D." Although the framework for reflection, as we shall see, has changed considerably since then, some issues have not lost their relevance‚ÄĚ 212. Technology Management 209 Millier.P, ‚ÄúStructuring the Field of Technology and Innovation Management, European Entrepreneurship Education N 2003 / 08, January 2004, P Romon.F, "Innovation Management: Modeling Tests in a Systemic Perspective", Doctoral Thesis in Management, Central School of Arts and Industry, Paris Central School, November 2003, P Garderet.P "The Management of Innovation", Central Community Notebook No. 584, March 2008, Available at: Weil.Th, "Innovation Management in Businesses", In Annales des Mines, December 2003, pp. 60 94

98Chapter 2: Overview of determinants and key factors driving innovation. Management is the company's heritage, it is the knowledge that forms the basis for the company's products and processes. It is also a design and production activity that responds to market needs. Technology management reveals the need for integrated technology management, based on the company's ability to recognize and integrate exogenous techniques, manage the management of its skills in accordance with its strategy, increase its learning abilities, capitalization and knowledge management, improve its knowledge. but also outside its field of activity. In fact, we deal with: - The balance of the company's technology capital, represented by the technology portfolio - Management and optimization of the technology portfolio - Observation, identification and evaluation of alternative technologies for a given need thanks to the previous day. - Selection of the most relevant technologies to achieve a competitive advantage - Access to mastering the competences of the chosen technologies - The subsequent improvement of outdated technologies - The management of R&D activities We can say that the company feels obliged to develop through this. its own resources on the technologies it needs, for which it is forced to create, finance and manage research and development activities. B. R&D management Internal R&D can be defined as an activity that "consists of ensuring the development of innovations in the company, especially through the R&D function or project units." This highly responsive form of organization allows the company to generate profit by exploiting the innovation by limiting the diffusion of the developed knowledge and protecting it from imitative practices by legal means. Optimization of a product 214. Its management mainly includes: - Programming and planning of research and development - Optimization of research and development funds - Evaluation of the work and its correct use - Organization of resources between central research centers and decentralized teams - Management of R&D - personnel (remuneration systems, promotion, careers for R&D personnel, etc.) - Animation (stimulation of creativity) and training of researchers. Therefore, the R&D management is not limited to research programs, but the company is primarily concerned with having the necessary skills to implement its development projects. Managers want R&D to be able to provide answers to problems raised by development teams when necessary, but the time it takes to program and execute projects (a few months to a few years) is 213 Loilier.T & Tellier. A, "Management of Innovation", Management and Society Edition, 1999, P Soparnot.R & Stevens.E, "Innovation Management", Dunod Edition, Paris, 2007, pp. 25 95

99Chapter 2: Overview of Determinants and Key Factors Driving Innovation Much shorter than it takes to build a skill. It is therefore not possible to carry out research and development "just in time" in accordance with the needs of the projects. On the contrary, R&D builds a pool of available knowledge and skills that projects can draw on. To control the development of this stock, it depends on the monitoring and analysis of the development of technologies, markets and the competitive environment. However, even if this analysis is done properly, the competencies the company builds and the knowledge it acquires may not be optimally aligned with the needs of the projects, either because more effective solutions have been developed elsewhere or because of the contribution of the non-controlled company's technology can be helpful. It must then be able to identify, recreate and integrate these useful technologies into its systems. This represents a new and significant role for research and development, traditionally responsible for developing the necessary skills in-house. 1.2 Company structure and innovation The type of structure a company can adopt determines the innovation dynamics. In fact, we can maintain different types of structures developed by authors whose main concern is to find the best way to do their work. to organise. According to Torres-Blay Olivier, we can distinguish: simple structure, mechanistic bureaucracy, professional bureaucracy, segmented structure, adhocracy and missionary organization 215. Following Mintzberg's work, Miller.D retains only four forms because, in his opinion, it is the professional bureaucracy. and the contract organization generally corresponds to non-profit administrations or associations 216. Companies with simple structures usually have to pursue niche or differentiation strategies through marketing. The focus on one market segment compensates for the disadvantages of the small size. On the other hand, the strong centralization associated with simple structures is a brake on innovation217. The structure of the mechanistic bureaucracy, caused by the strong specialization of tasks and the strong standardization of products and cost dominance. On the other hand, the rigidity of this structure makes an innovation-based strategy completely irrational. Because the divisional structure, which is particularly suited to the diversification strategy, often lacks the necessary flexibility to implement a strategy of differentiation through innovation. The Adhocracy structure, which often develops in complex and unstable environments and has a sophisticated technical system, perfectly fits the innovation strategy 218. Adhocracy is essentially an innovative organization. In fact, what is special about the adhocracy structure is that it is flexible and anti-bureaucratic. The internal work favors small interdisciplinary groups, usually formed around highly mobilizing projects with a high level of imagination and creativity. Adhocratic organizations often operate in the high-economic sectors of strategy and structure: a step towards synthesis", Management Review, Vol 21, N 1, March 1996, P Torres-Blay. O, Opcit, P Reflections on the nature of structures and good organization in companies, is mainly described in the publication of Mintzberg.H (1982, 1986, 1990) 96

100Chapter 2: Overview of determinants and key factors driving technological or high-tech innovation. It is a kind of structure that enables innovation and entrepreneurship. Adhocracy is the organizational structure where the spirit of initiative is encouraged, the most talented and competent people are valued, and the incentive to innovate within the company is very strong. Burns and Stalker emphasized that organizational structures play an important role in innovation dynamics. They also showed that organic structures are particularly suitable for external and internal environments219. A little formalization of the work. This type of structure gives individuals in the organization the freedom and flexibility to assign roles, creating flows of initiatives that can lead to innovation. 1.3 Education and training Any innovation requires changes in the organization and the quality of work: it requires adaptability, exchange with new operators and a creativity that is not present in all the skills that have been gathered in the past. The acquisition of these skills can only happen through training that affects both the actors responsible for innovation and all employees: managers, supervisors and all employees and employees. It is important to emphasize that vocational training has as its main purpose the creation of various skills necessary for innovation. According to Bellon, any organization that wants to teach the necessary skills should develop a training plan. The latter should be defined in accordance with the company's needs in terms of skills necessary for innovation. Then there is a whole process of communicating the goals of education and implementing the means to be used.220 Learning is the process by which knowledge and skills are acquired. There are different types of learning that we can divide into seven processes that differ in their method of acquisition but are combined: Learning through research, which takes place in technical research centers and in our own laboratories - Learning through the experience of trial and error : it is the result of a business project, the memory of previous mistakes in the management of other projects - Learning through use takes place through the acquisition of machines, processes, licenses and through the transfer of knowledge through copying and collaboration with external technicians - Learning for practice, which takes place in the production workshops - Learning through evaluation of the projects Stalker.G.M, "The Management of Innovation" , Tavistock Edition, 1961, P Koenig.G, "Organizational Learning: Location Identification", French Management Review , January-February, cited by Sopornot R .and Stevens E., opcit, 2007, P Bellon B, Opcit, P59 97

101Chapter 2: Overview of determinants and key factors driving innovation - Learning through interaction or collaboration: This is learning through collaboration. Several authors were interested in this approach. March explains that learning is a process of exploitation and exploration, while Argyris and Schon identify single- and double-loop learning. For March, exploitation refers to the accumulation of experience. If a management practice is repeated regularly, the actors are particularly aware of the results achieved. There is a logical relationship between exploitation and incremental innovation, which influence each other. In fact, the company that knows how to use the knowledge and information built up under the influence of experience stimulates gradual innovations. In addition, innovation activity enables the production of knowledge that supports the ability to learn through exploitation. Argyris and Schon distinguish between single-loop and double-loop learning. Single-loop learning is based on a logic of accumulation of experience through repetition and analysis of action strategies that enable the organization to improve them. Loop learning transforms action strategies, paradigms and guiding values, i.e. H. there is a reinterpretation and reconstruction of the modalities and premises of action, which makes experimentation possible. Innovative practice 223 In short, organizational learning is essential for a company to boost its innovation activities. In fact, the company must gain experience to make incremental improvements and must constantly explore new avenues to drive breakthrough innovation despite the higher risks and costs. 1.4 Information and scientific monitoring systems Information is also considered a constitutive factor for a learning organization and is indispensable for the implementation of innovation activities. Information systems are classically defined by Reix as "an organized set of resources": hardware, software, people, data, processes. Enables organizations to collect, process, store, and communicate information." 224. The information system collects, processes, and stores information to feed the entire organization; Processing is certainly the most important function of the information system, since its purpose is to provide managers with immediately actionable information. 225. According to Bellon, the company's information system consists of an internal system and another external system 226. Corporate accounts, project documents, reports whose sources may be structured meetings, Mar 222 J, "Exploration et Exploitation", in "Organization Learning", Organization Science , Vol 1, N 2, 1991, P Argyris.C and Schon. D.A., "Organizational Learning: Theory, Method and Practice", Brussels, De Boeck University, 1996, P. Reix.R, "Information Systems and Organizational Management", Vuilbert Edition, Paris, 2004, P. Bouvier AM, Longatte J. and Muller J., "Corporate Economics", Dunod Edition, Paris 2007, P Bellon.B, "Creative Innovation", Economica Edition, 2002, pp. 140 98

102Chapter 2: Overview of the determinants and key factors that stimulate innovation, project groups, quality circles, management control, research and information dissemination. On the other hand, the external system consists of databases, industry monitoring and technology monitoring. The various sources can be customers and suppliers, patent offices, fairs, conferences, research centers, etc. Today we talk much more about supervision than about information. Basically, the monitoring system consists of monitoring and evaluating the development of technologies, markets, competitor behavior, knowledge of regulations and other public decisions, as well as obtaining information about organizational and management methods. Monitoring is a strategic topic for the company, as it enables the development of new products and processes, collaboration with external partners, reduced learning times, increased innovation capacity and better utilization of human and physical capital. According to Bellon, we should keep in mind that technology monitoring should be coordinated with other important aspects (commercial monitoring, competition monitoring, regulatory monitoring, environmental monitoring, etc.) in order to collect, process and use information that is useful for the company. 227. Technology monitoring is a factor that encourages innovation in the company. The study of competitors and new technologies is carried out in various ways: market research, information from public authorities, participation in conferences and industrial and scientific events, research in documentation, cooperation with research centers. 1.5 Personnel management In addition to the technical and technological determinants of the innovation activities, personnel management is an important factor in the implementation of an innovation process. The problem initially was simply ensuring that the right skills were in the right place at the right time to ensure the success of the company. It seems simple, but it is not easy to manage such a process that aims to develop the company's stability. Senior managers became aware of this challenge when they realized that these kinds of skills were necessary if the company wanted to gain a competitive advantage by bringing new, higher-quality, lower-cost products to market. The interest then focused on education, leadership, the role of corporate culture and even the manager must show charisma without stifling the creativity of his employees. The behavioral effects controlled by the processes are decisive for the organization's success. bonuses and creativity bonuses), but it ensures the alignment between the company's needs and human resources. A very important aspect of HRM that promotes innovation activities is career management. Promotion can ensure the balance between needs and human resources. Career management takes place in three phases: the first involves the identification of potential and employees whose skills warrant promotion. For this, the company prepares certificates of competence (personality test, career analysis, etc.). The second element is training, which aims to improve the knowledge and skills needed to do the job. 227 Bellon B., Opcit, P Koenig.G, Opcit, P Amidon D.M, "Innovation and Knowledge Management", Organization Edition, 2001, pp. 86 99

103Chapter 2: Overview of Determinants and Key Factors Driving Innovation in the Firm by Ensuring Convergence of Objectives to Develop Great Motivation 230. Internal and external mobility of employees is also considered a key element of HRM, on which we then discuss geographic mobility (employee's ability to to change jobs after a move, start-up or restructuring), general mobility (the ability of the employee to learn new technologies) and technical mobility (the ability of the employee to expand his knowledge and skills). in the technology they work on) 231. The motivation of the employees is an important element of HRM that determines the success of innovation projects in the company. This motivation is to create a pleasant working environment through fair and reasonable compensation. Another really motivating point for the employee is that the company's goals are important to him, i.e. H. Convergence between the company's and the employees' objectives should be sought. Nevertheless, the employee wants to become more involved in the organization through more freedom and initiative. The pursuit of more responsibility and more creativity requires building a structure and multiple projects: performance improvement plan, quality circles, progress circles. There is a change in structures which leads to a lowering of hierarchical levels. Internal communication is an important element in creating a climate for participation. Downward communication (internal newspapers, notices, letters, messages, etc.), an information carrier for employees, is also a tool for motivation through awards (communication of an employee's or group's performance that fulfills an individual's need for recognition). . Upward communication is fully in line with the drive for employee participation and takes different forms. Company culture and ability to embrace innovation. Corporate culture is presented by various authors as an organizational characteristic capable of driving innovation to a very high degree, unifying behavior and directing it towards common goals 233. When the company introduces a culture that encourages employee initiatives, there are new ideas. In an uncertain environment, those companies that have developed a culture shift to rethink the organization will have an advantage. This requires a strong management commitment to create a motivating corporate culture, to provide a clear and simple vision for the medium-term strategy, so that employees can identify with this vision and project themselves into the future to respond better than others who set the company's goals. Managers must also develop a recognition policy, stimulate everyone's creativity and give all ideas the chance to realize innovations that differentiate them from the competition. Torres-Blay prefers to talk about corporate ideology rather than just corporate culture, and by ideology he means a whole system of ideas, values ‚Äč‚Äčand beliefs that support the company's overall policies. 230 Bouvier A.M. et al., Opcit, P Ibid. 232 Bouvier A.M. et al., Opcit, P. Assala KH. & Tounes A., "Cultural Influences on the Managerial Behavior of Algerian Entrepreneurs", 5th International Congress of the Academy of Entrepreneurship, Sherbrooke Canada October Torres-Blay O., Opcit, P

104Chapter 2: Overview of determinants and key factors driving innovation. Members adhere to a system of values ‚Äč‚Äčand culture that significantly affects the functioning and dynamics of the organization; When employees feel that they have a responsibility and a duty to the organization, they will certainly contribute to its success. On the other hand, if workers feel that they are being exploited like machines, they slow down their development. If the culture of innovation is not broad and widespread in the organization, the implementation of innovation projects will certainly be slow and the probability of failure will increase. A firm's appropriation of innovation represents its ability to internally promote an externally generated innovation. It is not enough that the company buys a new machine, a patent. To embrace these innovations. On the other hand, appropriation implies an integration of the external element in the organization and the learned attitudes, habits and behaviour. Grant depends on the company's culture and innovation management method. 235. A firm's ability to use external knowledge is a key factor in its ability to innovate. This ability is called the absorptive capacity of innovation. In addition, the work of Cohen and Levinthel (1989, 1990) showed that a firm's ability to exploit external knowledge is a critical factor in its ability to innovate. "It differs from the concept of absorptive capacity in that, depending on its basic knowledge and the learning process that takes place within it, a firm will be more or less able to exploit the technological opportunities in its environment." 236. In fact, a company's ability to communicate The use of knowledge depends mainly on basic, general or technical skills, the latest scientific and technological knowledge and the ability to communicate within the company. This wealth of knowledge makes it possible to recognize, process and apply the value of new information in innovative industrial projects. 1.7 Access routes to external innovation If the creation of an R&D function in the company enables the generation of new ideas and the development of know-how, this is not the only access to technology, and knowledge of how to use innovation provides significant opportunities for innovation. Innovation often requires the acquisition of complementary assets and there are several ways of accessing technology: a) Ways of accessing technology, the most classic according to Loitier T. and Tellier A. and consists in maintaining five main non-exclusive states , namely 237: Internal R&D: This is the first way for the company to access innovation, as it is very expensive for the company and uses other routes. Subcontracting: This is the performance of research activities through contracts with external entities such as private or public research centers and research companies. This access route is highly developed in countries such as Japan and the United States. 235 Bellon B., Opcit, P Arabi Kh., Institutional and organizational barriers to the innovation dynamics of the apprenticeship system in Algeria. Case of Bejaia Region‚ÄĚ, thesis, Tizi Ouzou University Algeria, 2007, P Loilier T. and Tellier A.,‚Äč‚Äč‚Äč‚ÄčOpcit, P

105Chapter 2: Overview of determinants and key factors driving innovation. Acquisition of interests and control: This is the acquisition, at least in part, of another innovative company and is therefore a form of external growth. Their first advantage is that they enable the rapid acquisition of new skills, especially to catch up with a competitor. This formula also makes it possible to deal with radically new activities with uncertain potential. Acquisition of licenses: This formula consists in acquiring the right to use the knowledge developed by an external innovator under conditions stipulated in the contract. The advantage of this formula is that licensing usually benefits both parties. For the buyer it often means the fastest, cheapest and least risky access to a technology, for the innovator it enables a wider diffusion of the innovation to increase the chance of success by increasing the specific offer. Collaboration agreements: These consist of sharing research and development efforts with one or more companies. These agreements can take different forms, they can involve competing companies (horizontal cooperation) or customer-supplier relationships (vertical cooperation). In addition, they do not necessarily involve the creation of joint structures, but may simply consist of an exchange of permits, sometimes accompanied by personnel. The proliferation of these types of collaborations is a commonly observed current trend, and the most frequently cited reasons for these new forms of collective innovation are the sharp increase in R&D costs and the high risk of failure. b) Strategic alliances and innovation networks: Alliances are mainly about cooperation between companies and competitors. But the creation of an innovation network goes far beyond this logic and aims to create a real community of interest around the innovative project. Formal agreements refer to companies deciding to share their resources to improve their competitive position. The alliances concerned the competitors, otherwise they are called partnerships. Before the mid-1980s, these practices were seen as a relief to companies in need of competitiveness and subsequently shattered "the assumption of corporate independence that underpinned mainstream management narratives"238. Strategic Alliances: The proliferation of strategic alliances in recent years is one of the most important phenomena that has disrupted the business environment. They can be defined as "associations between several competing or potentially competing companies that choose to carry out a particular project or activity by coordinating the necessary skills, resources and resources instead of: with each other in relation to the activity in question compete with each other or merge others together." or to divest or acquire companies". Technology can be understood as "currency of exchange or the ultimate goal of the alliance". Koenig G., Opcit, P Campus Dunod, Strategor, Corporate Policy, Dunod Edition, Paris, 1997, P Loilier T. and Tellier A. , Opcit, P79 102

106Chapter 2: Overview of determinants and key factors driving innovation. If technology is seen as a means of exchange, the logic of the alliance is one of complementarity. For one of the companies, it is about exchanging its technology for something of the same kind (different technology, different patent, etc.) or something more commercial (access to new markets). And when technology becomes the goal of the alliance, the logic of the alliance is completely different: the goal is no longer the complementarity, but the additivity of the company's assets, which will enable the formation of a new technology (the alliance before). limited to research and development) or full development of a new product (industrial collaboration therefore covers the entire innovation process, from research to commercialisation). The goal of this type of alliance is to share the costs and risks of the innovation project and reach critical mass. Innovation network: The concept of the network implies the expansion of all the company's partners (limited to the competitors within the alliance) in the innovation process. It is very difficult to imagine a definition of the composition of the network. The network "appears in management literature as a still vague concept. Modern organizational form, new management style, new organizational form for relations between companies, the network is part of this. Innovation. Although the networks bring together different actors and can have several configurations, they are organized around four generic poles242: - A scientific pole that develops knowledge, produces scientific articles and provides personnel training: research centers, industrial laboratories. - A techno-industrial center that develops artefacts, projects, prototypes and patents. - A market pool corresponding to the universe of users, dealers and distributors. - A political pole, corresponding to the public entities that set standards, rules of use and security that can promote the introduction of innovations. A network also consists of several interconnected poles. The positions are the visible elements in the organization. They can take different organizational forms and sizes. Connections can be bureaucratic (orders, common standards, procedures), economic (material and monetary transactions), operational (collaboration, collective decision-making, sharing of resources in action), cultural (common values, community of issues), or informational in nature. Availability of information sources, exchange, dissemination of information). 2. The institutional determinants of innovation 241 Campus Dunod, Opcit, P OECD, Manuel de Frascati, "Proposed Standard Methodology for Research and Experimental Development Surveys",

107Chapter 2: Overview of Determinants and Key Factors Driving Innovation Today we must take into account the growing importance of institutions for economic development. As for the institutional approach to technical change, the coordination of actors' behavior and economic activities, the emergence of rules and routines is unthinkable without institutions consistent with economic life. and the incentives to innovate are linked to a wide range of national factors, such as the regulatory system and the macroeconomic framework (intellectual property and patent rights, corporate governance, the financial system, tariffs, competition); These factors are both physical and human, individual and collective, and relate to both the public and private spheres. Innovation depends on the scientific performance of actors and institutions. But the technological ability of the players is also important. To determine the importance of institutions and their influence on innovation activities, we will first develop the elements that explain the need for public/private, business/university interaction. And their impact on innovation dynamics (the quality of the science and education system, the financial system, development policy, etc.). However, it is important to note that the relationship between IS innovation system approaches and institutionalist theories is not clearly elucidated. The quality of the scientific and technical system. This term was used by several OECD authors in the Oslo Handbook, calling it "scientific". and technical basis". After all, scientific knowledge and technical skills constitute an essential basis for innovations in the company. It is striking that in most countries these skills and knowledge are found in the scientific and technological institutions of the public sector, which seek to enrich them This scientific and technical center brings together both public and private research laboratories engaged in basic and applied research, higher education, partly in cooperation with research organizations, and general and technical education, and includes "university laboratories, private laboratories of the main industries" National standardization bodies, national research institutes and libraries, a network of scientific associations of scientists and engineers, scientific and technical publications, all driven by a growing supply of qualified personnel supported by the educational system and by a rigorous system of technical training, which creates a range of skills‚ÄĚ 245. According to the OECD, the Olso manual identifies the national scientific and technical base in terms of the following elements 246: The system of specialized technical education The university system The system of support for basic research: Sometimes basic science comes 243 Le Bas C., "Multiple technological substitution, learning by imitation and choice, in economic coordination and fixed learning", cited by Arabi KH, Opcit, P Amable B., "Innovation systems", in Encyclopedia of Innovation edited by Muster Ph and Panan, Economica Edition, 2003, P Amable B., Barr√© R. and Boyer R. Innovation in the Globalization Era", Economica Edition, 1997, P OECD "Oslo Handbook", "The measurement of scientific and technological activities . Proposed Guiding Principles for the Collection and Interpretation of Innovation Data‚ÄĚ, European Commission, Eurostat

108Chapter 2: Overview of determinants and key factors driving innovation in companies. However, these indirect benefits can be very significant. Scientific research often requires the development of extremely complex and highly sensitive materials. Numerous areas of basic research thus provide fertile ground for the training of qualified scientists interested in technical issues whose experience can often be effectively integrated into industrial problems. R&D activities relevant to public goods: Institutions and funding programs typically focus on areas such as health, environment and defence. Strategic R&D activities: Institutions and funding programs directly aimed at pre-competitive R&D or generic technologies and final support for non-captivable innovations: Institutions and funding programs directly aimed at research carried out in areas where it is individual companies that must sufficiently capture the benefits of their own internal research. When referring to the science and technology system, many authors pay particular attention to the role of the university system in the effectiveness of an innovation system. Preferring to talk about university reservoirs, the author Uzunidis reports that the OECD, emphasizing that the innovation policies of major industrialized countries promote the funding of research carried out under the supervision and management of companies, are reforming their university systems to make them competitive by improving the scientific and technical services for companies that promote the mobility of researchers and their integration into the economy. He adds in the same vein that Keynesian liberal economists ask science to take on a third mission, which is to collaborate with or resemble industry (university spin-off companies, trilateral contracts, university laboratory companies, public professional mobility 247). In addition, numerous studies in recent years have shown the emergence of a new role for universities, or rather the strengthening of one of the universities' main tasks, which is to promote results, as the OECD explains in the d Olso report: "Knowledge transfer is considered now as an important and legitimate function of universities, alongside their more traditional role of producing (research) and transferring (education and training) knowledge‚ÄĚ 248. When we talk about cooperation between universities and industry, several authors support the idea that, that the assessment of the effects of the collaboration between universities and companies should be accompanied by an assessment of other effects that can be observed in parallel with the increase in knowledge and implementation of innovations at universities and companies. These are the indirect effects that Pavitt describes in the next paragraph 249: "Some contributions will be direct when academic research leads to applicable discoveries, engineering research techniques (such as computer simulations), and instrumentation." Others will be indirect when it comes to academic research training. Background knowledge and professional networks contribute to the company's own problem solving, especially to experimental technical research, design practice, production and business, which will mainly take place internally within the companies. In this analysis, the author separates basic research from 247 Uzunidis D, Opcit, P OECD, perspectives for science, technology and industry, Paris, Pavitt K. & al. "The size distribution of innovative firms in the UK", Journal of Industrial Economics, vol. 55, no. 2, 1987, p

109Chapter 2: Overview of determinants and key factors driving innovation and applied and technological research. Basic research should develop and test general theories, while technology should develop and test specific artifacts. Research must therefore solve the industry's complex problems by making its new knowledge, new techniques and human capital available. 2.2. The quality of the education system In an economy where technical changes are permanent, the division of labor also develops under the pressure of the education system, which adapts and reproduces qualifications and skills. Even in industrial societies, the technical sciences develop with lightning speed, and therefore the equipment used to produce requires renewed knowledge. The more qualified the workforce, the greater the opportunities to use advanced equipment and the greater the potential productivity gain. The education system gives the individual the opportunity to acquire a limited specialization. General education does not serve to impart specialization or professional skills, but to impart general knowledge and develop the ability to learn. Expertise is acquired later. Specific vocational skills are more a matter for the field of education. The author Caroli defines the concept of the educational system based on four elements: the organizational form of the school system, the type of education offered by the companies, the willingness to pay for the education and finally the degree of institutionalization of the education. 250. The effectiveness of a system depends on the determinants of each of its elements and their interaction. On the other hand, since the early 1990s, the European Commission has insisted on the need to adapt the education and vocational training systems of the EU member states to enable them to pursue a consistent innovation policy. Among the Commission's proposals, we maintain 251: Sufficient integration of technology in the learning of scientific disciplines. Promotion of a pedagogy that allows for a personal approach to research, experimentation and discovery as well as the acquisition of transversal skills (working in projects and in teams, communication) and training in new production conditions in companies (understanding of a market, of a request, etc. .). Rapid integration into education, hybrid areas of knowledge that correspond to new professions. Labor mobility: Innovation is encouraged through exchanges, confrontations, interactions and mixtures. The spread of ideas and the mobility of people are important for the creation and dissemination of news. Especially between the world of research, the university and business. 2.3 Business-university partnership and valorization policy It is true that innovation is not only seen as a product of the business, but rather arises from complex interactions between producers. 250 Amable B. et al., Opcit, P European Commission, Green Paper on Innovation, December 1995, p.

110Chapter 2: Overview of determinants and key factors driving innovation and users and between academia and industry. Implementing a business-university partnership is not so easy, as business and academia often have different but complementary goals when both parties realize the benefits of such a partnership. Progress has been made in this area: some countries, such as Germany and the United Kingdom, have intermediate structures between academic research laboratories and manufacturers to improve transfer by conducting semi-industrial pilot trials or prototypes with the help of manufacturers and in partnership (( Fraunhofer Institute in Germany) 253. In 2007, the French University of Lyon carried out a series of actions with Microsoft France to bring the two structures closer to an economic partnership, becoming the first French university to do so, after several joint projects. The Microsoft Group, The University of Lyon 1 puts the digital revolution and new technologies at the center of the project. The creation of partnerships between industry and the university presupposes the predetermination of a research policy and an innovation policy. the development of an innovation policy that is in line with the research policy. The stimulation of research is not enough to claim to have pursued an innovation policy. Nor can a country support innovation if it does not have research that is both active and accessible at national level. In fact, it is essential to implement research policy and innovation policy in symbiosis. In order to implement an innovative industrial project, the complementarity of the industrial sector with research is undeniable. Research policy tends to develop scientific knowledge by supporting public research laboratories and funding university researchers. Innovation policies thus often promote the success of companies' innovation projects, that is, their development, productivity and successful commercialization of new products or processes. In this case, the government assumes an intermediary role by establishing structures and intermediary organizations that act as a bridge between the research sector and the industrial sector. Successful experiences in developed countries testify to the interest in an evaluation policy. As an example, we present a Swiss model where the Interface Entreprises structure was created in 1998 to connect companies and the many organizations looking for internships for their students. This cross-departmental structure depends on the Department of Public Education and Finance. It manages a database of internships and training in companies. We can also mention the American example: in order to encourage research, provide financial support, make useful results available, make academic careers more rewarding and open up new career opportunities for graduates, the USA has created spin-offs for jobs in a company that represents a company. seeking a university service was created to ensure industrial or commercial further development of the expertise or research results available at the university. The creation of a spin-off makes it possible to take the development process out of the university where it has no place and which does not correspond to its goals and culture, to obtain repaid advances or grants, to give researchers an entrepreneurial opportunity. 252 Boumbiéne F. "Innovation and business university partnership in Algeria, which approach?", Review of Innovation, Review of Public Sector Innovation, volume 10(2), 2005, Articles n Arabi KH., Opcit, P

111Chapter 2: Overview of determinants and key factors driving innovation convergence between research and industry, such as business incubators and business creation. 2.4. The role of the financial system We do not need to dismantle the emphasis of the financial system towards economic behavior, we note that several authors have demonstrated the relationship between the financial sphere and the real economy, sometimes contrary to the logic of industry and financial logic. . In addition to the innovation process, it is also about focusing on one of the essential dimensions of success: financing. A company's ability to innovate depends to a large extent on the resources it has available or can acquire to implement its innovation project. In addition to internal resources, the company generally has direct or indirect government support, as well as external resources in the form of debt and venture capital.254 To encourage companies to innovate, governments in many developed countries have established several support schemes. These are indirect measures in the form of tax treatment of expenses related to the innovation process. There are also direct measures, which are numerous and complex. Direct state aid is the national procedures introduced by the various ministries or the support given to companies through the creation of boards or agencies to support innovation projects. We note that government support for innovation is often insufficient to complete the projects started, forcing companies to look for external resources to meet their needs. Nevertheless, external financing for innovations is difficult to access and involves high risks. We can summarize the external sources of financing innovation in two main formulas, namely debt capital and venture capital. In general, traditional banking instruments are relatively unsuitable for supporting innovation projects because the banker's or financier's assessment criteria are based on the past, while innovation is a bet on the future. In fact, the bank prefers companies with a low probability of insolvency and offers information guarantees such as balance sheet and income statement. and financial such as physical assets and collateral. The lack of guarantees in the financing of new innovative companies increases these companies' access to bank credit. The company has no accounting history and real assets are greatly reduced. Accounting functions and real assets are greatly reduced. The characteristics of the loan are also incompatible with the financing of these companies. Despite this situation, governments support the implementation of specific measures to finance innovation in banks. Capital loans, subsidized loans and medium and long-term loans are examples of this. intangible long-term loans. The limitations of this form of financing suggest that companies are finding effective new resources, including venture capital. Venture capital is another special type of business financing that has made it possible to highlight young and emerging American companies in a number of specific niches that have gained the reputation of Intel, Federal Express or Compaq. Venture capital 254 Lachmann J. "Financing Innovation Strategies", Economica Edition, Paris, 1993, p.

112Chapter 2: Overview of determinants and key factors driving innovation is defined by the European Venture Capital Association (EVCA) as: "all capital invested by a financial intermediary in specific companies or projects with high potential"255. Funds Venture capitalists interested in a particular area of ‚Äč‚Äčinnovation, such as a particular area of ‚Äč‚Äčbiotechnology, hire specialists, usually with PhDs in the field, to evaluate investment projects. You have to rely on specialists because laymen often cannot assess the feasibility of these innovations. In addition, specialists must be hired by the venture capital fund so that these potential innovators can guarantee the confidentiality of their files. 257, and they emphasize the language of an active shareholder in the company or manager. In a business sense, venture capital knowledge is financial knowledge, valuation and advice in business establishment and development. Venture capital is at the core of a network of relationships (financial investors and advisors) that they manage and mobilize. The USA was the first to develop instruments adapted to innovation financing needs. To respond to an extraordinary innovation dynamism, the American economy has introduced corresponding financial innovations. The development of the formal and informal venture capital market in the United States is the main explanation for the success in creating innovative companies, which is why most countries strive to develop these forms of financing. Venture capital can be formal or informal258; The first acts as a financial intermediary and raises funds from investors. 259 (informal) business angels are successful entrepreneurs who can draw on extensive networks and resources. Conversely, they commit themselves to risk capital on the basis of simple contracts. They invest in new companies with high growth potential. Venture capitalists have financial skills and technological expertise and invest in more mature companies. 2.5. Other areas of public support for innovation In addition to the public support mentioned above, we can add other implications of the state as a 'development actor'260 that are more important and decisive for the innovation activities. Government intervention concerns basic infrastructure, the education system and legislation, especially those protecting innovations. Technological change is characterized by many imperfections or inefficiencies: economies of scale, externalities, incomplete markets, information asymmetry. This gives the government the right and, above all, the duty to intervene. In the neoclassical view, there may be room for government intervention if the market does not produce the results that society considers desirable. Mission 255 EVCA in Encyclopedia of Management and Management E.G.M. Edition Dalloz, 1999, P Schlink G., "The determinants of the exchange of creative ideas as innovation challenges, an application to the relationship between the new innovative company and its financier", thesis in economics, 2006, P Lachmann .J, in Encyclopedia of Management and E.G.M. Management, Dalloz Edition, 1999, P Lachmann J., Opcit, P Englene, representing the form of informal venture capital 260 Rochet C., "Innovation a question of the state, to make reforms in the light of." Third Industrial Revolution", dissertation in Managementwissenschaften, 2005, pp. 37 109

113Chapter 2: Review of determinants and key factors that drive public innovation in such a framework is to ensure that investment in research is commensurate with the societal return on that activity, i.e. H. above the level achieved in a decentralized balance based on private performance. The state has a wide range of instruments for this: 261 It invests in a public research system. Encourages companies to invest by increasing private returns (subsidies, tax breaks, etc.). He tries to limit market imperfections such as competition, patent law and financial regulation (markets). One of the most important tasks of the state is to create an appropriate legal and regulatory framework that promotes innovation. 262: The rules ensuring the protection and dissemination of innovations (intellectual and industrial property rights, standards) should be fully exploited, the best use of the protection rules: patent applications represent a real barometer of technological dynamism (determining the costs of granting and maintaining patents) . Compliance with standards, certification and system quality: Each innovation is developed and implemented within the framework conditions created by the rules. Standards, certification and the quality system. The very design of a product is influenced by whether or not there are standards: precisely descriptive standards that limit the possible options, or performance standards that dictate goals to be achieved. We can conclude that we can say that innovation is not simply the work of an isolated entrepreneur, but its success depends on the quality of the institutions that surround the company. Having presented the institutional determinants of innovation in the context of institutional thinking and work on innovation systems, we should also note that the list of determinants originating from institutions remains incomplete and poorly defined by economists. 3. Geographical determinants of innovation An analysis of the role of space in economic phenomena and especially in the dynamics of innovation makes it possible to better understand innovation activity and its various sources and thus define a more relevant innovation policy. It is therefore appropriate to pay attention to the concept of space, as Krugman affirms in his work Geography and Trade that "the main reason for revisiting economic geography is the intellectual and empirical laboratory it provides"263. Although Schumpeter focuses very early on the emergence of clusters of innovations or groups of innovative entrepreneurs, the issue of space is not addressed in his analyses. However, geographers have recognized the importance of spatial proximity to innovation for a number of years (Malecki 1997, Hall and Markusen 1985), but apart from a few pioneers such as Marshall, this turning point in economics is relatively recent. Although late, this introduction of space in analysis by P. Krugman P. is cited by Hussler C. in "Spaces, Externalities of Knowledge and Innovation: theory and empirical insights", Doctoral Dissertation in Economics, 2004, pp. 11 110

114Chapter 2: Overview of determinants and key factors driving the innovation dynamics of innovations has resulted in an extensive literature (Caniels 1999, Carrincazeaux & al. 2001, Feldman 1994). The latter gives innovation a strong territorial component in the far-reaching extension of Marshall's ideas to industry. European context. All these studies observe a strong spatial polarization of innovation-related activities. Since the late 1980s, they have also been accompanied by a larger theoretical production that aims to describe the forms of local development through innovation: district, technology park, research park, innovative environment, high-tech cluster. These approaches share a common vision: they assume that innovation can have a strong spatial dimension and that firms benefit from co-location while maintaining the values ‚Äč‚Äčof geographic proximity that would be the main driving force. companies at regional or local level 265. The concept of geographical externality of knowledge is often central to these analyses. After all, the positive effect of geographical proximity would essentially derive from the existence of a limitation on the spread of external knowledge effects in space. In order to clarify the topic of what we want to develop (the geographical determinants of innovation), in this work we want to emphasize the role that local production and innovation systems play in the development of innovation activities. We also emphasize the crucial role of proximity in innovation and show again that proximity and a spatial grouping of companies create externalities that promote the spread of knowledge and action. 3.1 The role of local production and innovation systems in stimulating innovation activity Innovation is often seen as the process of transforming production systems. In recent years, however, large companies are no longer seen as the only innovators. SMEs and especially local SME systems (industrial districts, technology parks, local industrial systems, technology districts, etc.) are able to initiate innovation processes, regardless of whether they are in collaboration with large companies. The region and the close ties it forms can actively support innovation and economic development. The work on localized production and innovation systems generally seeks to define the local institutional and organizational conditions favorable to the development of collective innovation processes. This approach makes it possible to understand and explain the emergence of particularly dynamic regions, which develop into places that generate new technologies and new products, and where new incomes and new jobs are concentrated. These regions are at the heart of economic development processes, "would microelectronics have existed without Silicon Valley?" The extraordinary development of fashion and design in clothing, footwear and eyewear. Would it have been possible without the industrial areas north of 264 Massard N., Riou S., "Specialization and diversity: the challenges of the debate on the nature of innovative metropolitan areas", 3rd day of proximity, Paris, June Massard N . and Torre A., ‚ÄúGeographic Proximity and Innovation,‚ÄĚ Region and Development Report, Dec

115Chapter 2: Overview of Determinants and Key Factors Driving Innovation in Italy? 266. The local innovation system approach helps to understand how local relationships can support innovation activities and economic development. Ugly. The innovative environment: The environment can be defined as "a relatively coherent territorial whole consisting of a group of actors with their respective know-how and common rules of competition/cooperation". Far from representing a closed universe, it is, on the contrary, in constant interaction with its surroundings, especially with the transformations of markets and technologies on an international level. (Innovative environments) the authors Aydalot and Maillat highlighted the territory as a source of innovation and therefore coined the term innovative environments, since "in the territorial logic, innovation arises especially from the development of a know-how and a technical culture that is historical due to a internal dynamics specific to the region"268. The innovative environment has two main functions: change. Second, the innovative environment supports sustainable learning processes and ensures the tacit transfer of know-how and non-codified intangible assets between companies. The components of the innovative environment are presented as follows: A geographical space that knows no boundaries and has a certain unity and homogeneity that leads to identifiable and specific behavior and a technical culture A group of actors: companies, R&D centers, local authorities There should be independence in decision-making Tangible (companies and infrastructure), intangible (know-how and knowledge) and institutional elements (different forms of local authorities and organizations with organizational competences) A ‚Äč‚Äčlogic of interaction: the actors must be connected Based on mutual dependence on a balance of cooperation and competition. A learning logic: the ability of actors to adapt their behavior to changes in the environment. The logic of interaction and learning refers to: The formation of know-how that makes it possible to control the production process and create new products and new techniques. Development of behavioral norms that organize the relationship between actors to find the balance between cooperation and competition. Knowledge and ability to recognize the specific resources of the different actors and the environment as an opportunity for interaction. The relationship that actors in the environment have to the outside world. 266 Crevoisier O., "Innovative Environments, Proximity and Economic Development", In B. Pecqueur and JB Zimmermann, "Economics of Proximity", Lavoisier Edition, Paris, 2004, P Pecqueur B. and Zimmermann J.B, Opcit, P Aydalot P. ET Maillat, "Innovative environments in Europe", Paris, GREMI, 2004, p

116Chapter 2: Overview of Determinants and Key Factors Driving Innovation b. The Industrial Zone: Industrial zones have long been part of the economic fabric, but Alfred Marshall was the first to take an interest in these structures. In his 1907 book Principles of Political Economy and in his 1919 Industrie und Handel (1919) he even talks about the secondary benefits of certain specialized industrial areas. Marshall defines the district as "a collocated group of firms specialized in the production of one or more products that benefit from external economies (transaction costs, information exchange, trust, knowledge accumulation, and innovation"). 269. Beccattini, for his part, repeating his remarks about the industrialization of the third Italy, defines the industrial area as: "a socio-territorial unit characterized by the active association of a community of people living in a defined and historically determined territorial area and a population of industrial companies. Strictly speaking, unlike what happens in other environments, say the manufacturing city, the society and the companies tend to permeate them, so to speak. After studying the concept of industrial district, I confirm that this form encourages innovation activities: "If we summarize the results of the work in the districts, we get a standard description that combines the following features: an area organized around a small town, specialization in the manufacture of a specific product to be implemented." of the local business know-how, the accumulation of numerous specialized SMEs linked by competitive and cooperative relations, the importance of external economies, made possible by geographical proximity and the socio-cultural homogeneity of the territory, an atmosphere that promotes learning and innovation." 271 c Clusters: If clusters represent a new way of qualifying the local forms of organization of innovation activities, it is not easy to define their exact content or radically distinguish them from already known concepts: innovative environments, industrial districts. Industrial clusters are thus defined as: "Geographical concentration of related companies and institutions in a given area." Clusters include a number of related industries and other competitively important entities. For example, these are providers of specialized inputs such as components, machinery and services, but also providers of specialized infrastructure Clusters also often extend downstream to distribution channels and customers and laterally to producers of complementary products and to firms in industries linked through skills, technologies or common input. Finally, the government and other institutions, such as universities, set standards in many clusters. Are innovation networks localized? Proximity and knowledge diffusion, the case of Agbiotech SMEs‚ÄĚ, Third Congress on Proximity, New Growth and Territories, Paris, 13-14 December Dumas J.C., Opcit, P

117Chapter 2: Overview of determinants and key drivers driving innovation agencies, think tanks, vocational training providers and trade associations offering specialized training, education, information, research and technical support." 272. The cluster approach first refers to grouping different companies within the same geographical area . Geographical proximity in this case is often considered supreme and provides advantages in terms of knowledge circulation, diffusion of a common culture or development of human or social capital within the area in question. Porter supports the idea that clusters are not always focused on innovation. When this is the case, it is sometimes extremely efficient high-tech complexes like Route 128 and Silicon Valley where many high-tech companies are located, and the authors suspect a concentration of industrial research and development and the combination of tacit and codified knowledge play a major role D. The learning region: only recently authors have introduced the term learning region to describe the result of a transformation of the industrial area or the innovative environment (Asheim 1996, Maillat and Kebir 1999), they consider this term as an extension of innovative environment: While The innovative environment describes the organization that is most conducive to innovation, i.e. again, this concept is based on the idea put forward by Florida that regions have a role to play after the transition to a knowledge-based economy in providing elements (infrastructure and other resources) that can support companies in sharing and exploiting knowledge. Pratt gave another, more precise definition: "Learning region" is: "A specific structured combination of institutions that strategically focus on technological support, learning and economic development, and which may be able to integrate establishments into the regional economy and thus companies for local rearmament.‚ÄĚ than migrating from the region." endogenous e Innovation networks or clusters: Networks perform a very important function in the economic system through the coordination they generate between actors. involved in the production of certified knowledge and those seeking competitive advantage in economic markets." economic actors are organized, 272 Levy R., The place of University Research in Innovation Systems: a Territorialized Approach, PhD thesis in economics, Louis Pasteur University, Nov. 2005, P. Hussler C., "Space, Knowledge Spillovers and Innovation: Theoretical and Empirical Insights," PhD Thesis in Economics, Louis Pasteur University, Dec. 2004, p.

118Chapter 2: Overview of determinants and key factors driving innovation and governing interactions of particular importance in the process of technical change 274. According to Callon, the network is like "a coordinated set of heterogeneous actors: public laboratories, technical research centers ". , companies, financial organizations, users and governments that are collectively involved in the development, production and distribution of production processes, goods and services, some of which will result in a market transaction"275. This may lead us to believe that the number of networks created highly dependent on the institutional framework There are two types of innovation networks: First, there are many researched innovation networks in industrial economics, related to strategic agreements and often the result of large multinational companies The main characteristic of these collaborations is that they target to solve a very specific problem that was clearly identified at the beginning of the collaboration. So it is monofunctional networks. The other network whose purpose is not so clearly defined, for the simple reason that there are too many uncertainties that can be related to the technical feasibility, to the product that will ultimately be marketed, to the production methods. In general, it is about partners making a commitment, it is a multifunctional process where it is not possible to say in advance what the costs and benefits will be for each individual partner. The business cluster is defined as "network of independent companies of knowledge-producing institutions (university, research institutes, technology companies), bridging institutions (e.g. technical service providers or consulting companies) and customers connected in a value-creating production chain." The business cluster involves the exchange and sharing of large amounts of knowledge and information. According to the OECD, the concept of 'cluster' is broader than the concept of 'business network'. No company can innovate in the closed space of its laboratories. The network cluster then unfolds as the main form of private organization for the acquisition of knowledge and innovation. It enables companies to acquire the greatest possible amount of knowledge and information that is crucial for their innovation projects. Effects of forms of proximity on innovation dynamics The classic definition of proximity refers to closeness, closeness, similarity and short distance. More generally, closeness between elements of a set expresses the existence of a sufficient degree of similarity in one or more of their properties. The concept of proximity was first developed by Nelson R. and Winter S. This concept is an analytical tool to highlight innovative business development as well as business mergers278. The author Boschma proposes to distinguish between five types of proximity: cognitive, organizational, social, institutional and geographical, which can promote and improve interactions between knowledge-producing institutions and the creation of shared knowledge. According to the same author: "The closer the actors are (in 274 Amable B., Barré R. and Boyer R., "Innovation systems in the era of globalization", Economica Edition, 1997, P Amable B. et al., Opcit, P Huriot JM and Pauteur J, Proximity and Distances in Spatial Economic Theory, Economica Edition, 1998, P OECD, Frascati Manual, Proposed Standard Method for Research and Experimental Development Surveys, 2002, 278 Huriot JM and Perreur J., Opcit, P

119Chapter 2: Overview of determinants and key factors driving innovation in any form. The more they interact with each other, the more they learn to innovate. 279 This means that the proximity between the actors promotes their interactions more and in this way they learn to innovate more. While geographic proximity is important for structuring spaces that foster technological innovation, it is not enough. The other forms of closeness (organisational, institutional, cognitive, social) must be integrated in the reflection on the organizational and structuring patterns of the innovation activities. Ugly. Geographic proximity: This refers to any ties that may exist between economic actors due to the distance that separates them in geographic space. Geographic proximity is associated with certain communication needs, such as personal contact. It is also associated with various forms of externalities, grouped under the term agglomeration economies. Many authors agree that geographic proximity explains innovation dynamics through the impact on knowledge spillovers. Lundvall distinguishes between radical, incremental innovation and stationary technology and shows that both are linked to different forms of spatial interaction. : "The fact remains that certain activities, especially management and research activities, are likely to remain concentrated in a small number of large groups." Metropolises, insofar as the direct contact between people seems to be an essential part" 281. The physical proximity will probably play a facilitating role in the coordination of actors to that extent 282: It can facilitate the meeting and thus the attachment of actors , which has the potential of institutional proximity It can facilitate the transfer of a relationship from one embeddedness context to another Once the relationship is established, it can facilitate direct interaction by resorting to personal geographic (organizational or institutional) contacts Under certain conditions generate a specific organizational configuration: the territory Geographical proximity can favor any of the other forms of proximity and, conversely, each of these forms can be a substitute for geographical proximity, in particular by triggering learning processes and thus collective knowledge formation through interaction B. Organizational proximity: 279 Boschma R., "Proximity and innovation: a critical appraisal", Regional Studies, 39(1), 2005, P. Torre A. and Gilly J.P., "On the analytical dimension of proximity dynamics", Regional Studies , 34(2 ), 2000, P Gerard Varet L.A. and Thisse J.F., "Local Public and Geographical Economics," Annals of Economics and Statistics, No. 45, Special Issue, 1997, pp. 1-18, 282 Pecqueur B. and Zimmermann J.B. Opcit, pp. 36 116

120Chapter 2: Overview of determinants and key factors driving innovation. This type of proximity refers to the proximity in the methods on which the predominant economic actor's main activity is based. However, organizational proximity is not necessarily linked to geographical proximity, but a factor that favors the exchange of information (technological), but also the mobility of factors between the actors involved, due to the presence of a common or marketable capital linked to geographical proximity , the influence relations between the various economic actors can be analyzed using the notion of local production systems. The concept of organizational proximity refers to relationships between actors and is characterized by sharing a common culture and history; it is also a factor that makes it possible to bridge the natural distances between agents and innovation. versus institutional proximity: this type of proximity can be defined as actors' attachment to value systems aimed at achieving a common goal, where this attachment leads to the identification of a common coordination structure. This coordination structure can have a formal or informal aspect, but it must be recognized by the employees for the exchange about it to be valid. Institutional connectedness arises through the recognition of a mutual connection between the actor and the collective, mediated by the collective structure. According to Boschma R.'s study, institutional proximity is associated with the existence of a common institutional framework at the macro level (this is the framework for national or even regional innovation systems). This stable institutional framework will promote knowledge sharing and creation 284. d. Cognitive proximity: Cognitive proximity corresponds to sharing a common frame of mind that promotes the exchange of tacit knowledge between institutions. By developing such closeness, actors can improve their absorptive capacity.285 According to the author Boschma, cognitive closeness mainly occurs within companies. In general, cognitive proximity can connect different specialists in the same field who will be members of the same sector innovation system 286. In addition, very strong cognitive proximity between individuals or between organizations can lead to blockages in knowledge formation, due to too many shared routines between the two settings , a situation that reduces the creative capacity of both. "Thus, actors need cognitive proximity in the form of a common knowledge base if they are to communicate, understand, absorb and process new information." Rychen F., "Companies and Territories: Proximities and Local Development", Economica Edition, Paris 2004, P. Boschma R., "Proximity and Innovation", Rural Economy, N 2, 2004, P. Cohen and Levinthal, Opcit, 1999 , P. Boschma R., Opcit, pp. 38 117

121Chapter 2: Review of determinants and key factors that drive innovation reduces the learning potential, but also increases the risk of limitation and premature and unwanted transfer to competitors‚ÄĚ 287. e. Social proximity: This type of proximity occurs because the economic relations between the actors are embedded in social relations. For example, business leaders who attend the same fairs and read the same trade journals will naturally benefit from sharing knowledge and implementing joint projects.288 This closeness is achieved through the existence of relationships of trust. Reciprocity between organizations sharing knowledge. The consideration of social proximity in the analysis of economic relations goes back to the work of Granovetter, who found that economic relations did not only take place within the framework of market relations, but were integrated into social relations on the basis of a certain trust that, agents encourage you to be honest. More specifically, "The embeddedness argument instead emphasizes the role of concrete personal relationships and structures (or networks) of such relationships in creating trust and preventing bad behavior because of their very strong spatial polarization." Innovation is no exception and even more concentrated than other production activities. Therefore, most innovations are concentrated in a few countries, a few regions within those countries, and a few urban areas within those regions. In the United States, much of the innovation activity is concentrated on the coasts of the states of California, New York and New Jersey. In Europe, half of the research effort comes from just three countries: Germany, France and Great Britain. Geographical differences in innovation capacity are attributed to the presence of knowledge spillovers in both geographic economics and endogenous growth theories. Alfred Marshall's work has had a major impact on regional and urban economic research. In particular, this led to the development of the concept of Marshallian externalities, a concept that aims to explain the benefits of the geographical grouping of firms. There are two types of externalities: technological externalities (or spillovers in the spatial context), which focus on the impact of non-market interactions that result from phenomena directly related to the individual's utility or the company's production function, and economic impact externalities resulting from market interactions that only affect firms or consumers/employees through exchange with a price mechanism. The use of monetary externalities is relevant when markets are imperfectly competitive, that is, when one actor's pricing decision affects the well-being of others290. Knowledge externalities can be defined as: ‚Äúthe perceived utility of knowledge‚ÄĚ by a firm or individual not responsible for 91(3) 1985, Fujita PM and Thisse JF Economics of agglomeration, cities, industrial location and regional Growth‚ÄĚ, Cambridge University Press , 2002, pp. 27‚Äď118

122Chapter 2: Overview of determinants and key factors driving innovation. The initial investment linked to the creation of this knowledge, without any financial compensation. They directly promote economic growth because they provide more and more and also contribute to the innovation process without increasing costs. It would therefore be free to use for agents who have not set it up. As a result, private innovation revenues are lower than social revenues. Under these circumstances, the incentive to invest in research and development is not sufficient and the economic situation is not optimal. In this sense, externalities are an obstacle to the proper functioning of the economy. In the 1980s, this notion of knowledge waste was gradually modified, mainly under the influence of evolutionary work, by strengthening the positive dimension of knowledge waste. Difficulties in acquiring knowledge by promoting information dissemination increase innovation potential 292. Technological externalities play a central role in explaining the very strong polarization of innovative activities. The regions that benefit from these technological spillovers become more dynamic in terms of innovation and more attractive for the establishment of new companies. In this context, the hypothesis of a local dimension of these phenomena is significant. When the externalities are localized, a region that initially enjoys a small technological advantage builds up knowledge more quickly. This lowers the cost of innovation in that region, which in turn attracts more resources for innovation. This results in a collection of research and innovation activities in this region. On the other hand, if knowledge spillovers are distributed evenly across space, firms can benefit regardless of their location, and there is no reason for innovative firms to concentrate in the same region. Finally, we must not forget that innovation in a knowledge economy is no longer based on a linear but on an interactive model. Its development depends not only on the company's decisions and management practices, but also on an appropriate institutional environment that provides it with the resources and protection it needs. The area is still closely linked to innovation activities and appears as active support for its development. In this chapter, we have pointed out the long and complex nature of the innovation process and activities. However, determinants of innovation can be divided into different categories and cannot be traced back to the company's R&D function. The development of innovation requires the mobilization of internal and external factors for the company. In addition, in order to understand how the innovation process is built successfully, it was necessary to elicit three categories of innovation determinants, namely: organizational determinants of innovation, institutional determinants and geographical determinants of innovation. The success of innovations depends on the application of different skills, and the company can no longer manage innovation projects alone; Entrepreneurial endeavors should be supported by the state through its institutions and financial support. The space must also be adapted to the needs of companies, such as the world of localization 291 Galli√© E.P., "Collaboration, knowledge spillovers and the geography of innovation: the case of the biotechnology sector in France", working document, summary of this IMRI, Paris Dauphine, 2005, P Galli√© EP, Diffusion and spatial dimension of externalities within collaborative networks: the case of the biotechnology sector in France‚ÄĚ, Days of Applied Microeconomics, Lille, May

123Chapter 2: Overview of determinants and key factors driving innovation and agglomeration of firms that greatly influence knowledge transfer and thus lower the cost of innovation. Part 2: The main factors driving innovation in SMEs. Several authors have studied the factors and actors that influence the adoption of innovations in organizations (Damanpour 1991, Hussein 1981, Innes and Mitchell 1990, Kimberly and Evanisko 1981, Rogers 1995, Tornatsky and Fleischer 1990). Taken together, these studies suggest that innovation is subject to influences from multiple sources, including individual, organizational, environmental, and characteristics of innovations. In addition, they emphasize the importance of recognizing that all these factors can affect the innovation process differently, as they do not all have the same effect and do not all work in the same direction. Since innovation is understood as the realization of creativity, it can only occur if the environment is stimulating and the possibility of different situations does not significantly disturb the company. For this, innovation activities in SMEs must take into account several variables that affect the innovation process in the company, namely: 1. Research and development and patents 1.1. Although R&D is considered quite critically as a determinant of innovation, it has become a strategic development factor for companies aiming to become 'world-class' organizations, especially SMEs. 293 They have long been regarded as indicators of innovation, and formal research and development activities do not necessarily lead to higher levels of product innovation in SMEs. However, R&D should be useful both for the development of products and production processes and for maintaining and expanding the company's competences in the processing and use of external information294. The presence of R&D activities can create an environment conducive to demand and thus promote the flexibility of companies, their ability to integrate new concepts and their ability to adapt to any changes in market conditions295. Added to this is the experience gained from previous R&D activities and their persistence. on the other hand, are sporadic and are said to promote innovation in companies 296. Several studies show that R&D is not essential for innovation and is not a sufficient prerequisite for it; however, their contribution remains important in the innovation process of SMEs (Baldwin, 1997). ; Baldwin, Hanel, Sabourin, 2000; St-Pierre and Mathieu, 2003). Research and development influence innovations in different ways. 293 Hendrick C., Problems of technology transfer and new theories of innovation and the firm, Region & Development Review, N 03/2006, P. Karlsson and Olsson, "Product innovation in small and large enterprises", Small Business Economics, 1998, 10, P Freel M.S., "Strategy and structure in innovative manufacturing SMEs: the case of an English region, Small Business Economics, 2000, 15, p Brouwer and Kleinknecht, "Firm size, presence of small firms and sales of innovative products: a micro - Econometric Analysis, Small Business Economics, 1996, 8, p

124Chapter 2: Determinants and Key Factors Driving Innovation enables firms to create new knowledge and use it to convert it into new products or processes (Brouwer and Kleinknecht, 1996; Karlsson and Dölsson, 1998; Landry and Al, 2002 ; Li and Simerly , 2002; Croteau, 2003; Becheikh et al, 2006a, 2006b) that help them maintain or improve their skills in processing and using external information. Thus, by maintaining and improving the company's ability to use, absorb and use information, research and development acts as an engine of innovation 297. Moreover, the presence of research and development activities supports the company in its efforts to identify new technologies that emerge up to absorb the market 298. These activities create an environment that promotes inquiry and thus promotes the flexibility of companies, their ability to integrate new concepts and their ability to adapt to any change in market conditions. Moreover, the experience and knowledge gained in previous R&D activities and their persistence, as opposed to sporadic implementation, stimulate innovation in companies299. In addition, the presence of personnel dedicated to R&D, by stimulating exchanges with the external environment, increases the use of extensive information resources and increases creativity in the company 300. Finally, internal research and development is particularly important for innovation in high-tech sectors where acquisition of new technologies developed by competitors is very expensive or even impossible 301. Several studies (Becheikh et al, 2006a; Baldwin, Hanel and Sabourin, 2000; Brouwer and Kleinknecht) emphasize the close connection between research and development and innovation. Recently, in an important synthesis of the literature on innovation in manufacturing firms, Becheikh et al. found that more than 50% of the analyzed studies considered R&D as an explanatory variable for innovation and that almost 80% of them found a positive and significant relationship between these two variables 302. Examining the determinants of research activity and innovation in 5,729 small and large Canadians, Baldwin, Hanel and Sabourin found that R&D activity and firm size are the variables that have the greatest impact on innovation. The results show that companies that do not do R&D have only an 11% chance of innovating, while those that do R&D have a 41% chance. 303. In a microeconometric analysis, Brouwer and Kleinknecht examined the relationship between research and development intensity, especially R&D related to product development, and the share of sales of new products for 8,000 Dutch companies with at least 10 employees. Based on the fact that the experience and knowledge gained in past R&D activities make it possible to predict the future success of innovations, they hypothesize that firms engaged in permanent, structured R&D activities and not just random activities should show higher innovation rates . 297 Karlsson, C. and Olsson, O., Product innovation in small and large firms, Small Business Economies, N 10, 1998, P Subrahmanya M.H.B, Patterns of technological innovation in small firms: a comparative perspective of Bangalore (India) and North East England (UK), Technovation, Vol 25, No 3, P St Pierre et Mathieu, Opcit, P Roper, S. and Love, J., Innovation and Export Performance: Insights from British and German Manufacturing Plants, Research Policy , N 31 , 2002, Koivisto T., "Developing the Strategic Innovative Capacity of Firms", Theoretical and Methodological Guidelines for Interventions, Espoo: VTT Publications, 2005, P. Benchikh & al, Opcit, P. Baldwin, J., Hanel , P., and Sabourin, O., Determinants of innovation activities in Canadian manufacturing firms: The role of intellectual property rights, Institute for Analytical Studies. Research Papers, Statistics Canada, No. 122, 2000, p

125Chapter 2: Overview of determinants and key factors driving innovation. The results show that the intensity of a company's research and development has a significant impact on the speed and novelty of its innovations. The same results are obtained when looking at the type of R&D (occasional or permanent); Firms that view R&D as an ongoing activity are more likely to have high sales of new products, supporting the view that the accumulation of historical knowledge is important to a firm's ability to innovate. In companies where R&D is only occasionally carried out, there is therefore less continuity in the accumulation of knowledge and therefore less innovation304. Small companies tend to conduct research and development only occasionally. However, in terms of new product sales, the difference between occasional and permanent R&D is still significant when it comes to selling "new products to the business" but not selling "new products to the industry". Becheikh et al. A study of 247 manufacturing SMEs found that the more employees dedicated to research and development, the more likely a company is to be innovative. According to the results of this study, a positive relative change of 10% in the workforce dedicated to research and development increases the probability of firms innovating by 0.94% and the creation of innovations by 0.2%. 305. In general, this may be the case. It has been shown that the effect of R&D on the novelty of an innovation is smaller than the effect on the rate of innovation. This is consistent with the findings of Brouwer and Kleinknecht (1996). Therefore, we can assume that R&D affects the speed of innovation, but not the novelty of the innovation 306. In fact, investment in R&D is, in addition to the development of knowledge and skills, mechanisms that contribute to one of the most defining features that constitute the "innovation". system". In a well-defined sector 307. From the perspective of innovation as an "open" system, the R&D function is often outsourced or partially transferred from a large contractor to subcontractors in SMEs 308, namely in There are several sectors. where there is not necessarily are exclusively high-tech sectors 309. However, the relationship between R&D activities and innovation in SMEs still needs to be clarified and investigated for conceptual and methodological reasons 310. Based on the impact of R&D investments on the subsequent growth of firms, as confirmed in the literature 311. Some studies have used these investments as an indicator of capacity 304 Brouwer, E. and Kleinknecht, A., Firm size, presence of small firms and sales of innovation products: A microeconometric analysis , Small Business Economics, 8(3), N 18, 1996, P Benchick et al., Opcit, P. Ibid., P. Baldwin J. and Hanel P., The Determinants of Innovation Activities in Canadian Manufacturing Firms: The Role of Intellectual Property rights, Ottawa: Statistics Canada Micro Analysis Division Economics, 2003 , report 122, P Chesbrough H, Assembling the Elephant: a Review of Empirical Studies on the Impact of Change on Incumbent Firms, in H Chesbrough, R Burgelman (eds. ), Comparative Studies of Technological Evolution, Volume 7. Elsevier Science Ltd.: London 2003, P. Chesbrough H., Opcit, P. Becheikh. N, Landry R. and Amara N., "Lessons from empirical studies of innovation in manufacturing: a systematic review of the literature", Technovation 2006, Vol 26, N 5-6, P Co and Chew, Opcit, 1997, P

126Chapter 2: Overview of Determinants and Key Factors Driving Innovation in SMEs 312 why R&D is still to some extent confused with innovation today. However, R&D cannot be used as an indicator or proxy for innovation, as most previous studies have found correlations of less than 0.30 between these two variables313, i.e. H. rather mixed results on the existence of a direct causal relationship between one and the other (Brouwer and Kleinknecht, 1996; Hall and Bagchi-Sen, 2002; Roper and Love, 2002). In addition, most studies of R&D as a determinant of innovation do not distinguish between product R&D and process R&D 314 and measure e.g. only the intensity of R&D in terms of the number of people associated with these activities. Although activities are activities, their determinants and purposes are very different in terms of the strategic development of SMEs and especially in terms of the level of product innovation and process innovation. The same applies to the distinction between product innovation and process innovation, where most empirical studies focus on one or the other or on merging the two forms of innovation315. And while best practices for development processes such as concurrent engineering are based on the coordination and integration of product innovation and process innovation 316. So far, no empirical research has been carried out on the connection between these two types of innovation in SMEs 317. The connection between R&D and innovation is also of great importance to consultants and governments 318. The latter develop policy and provide a range of services to promote and support R&D and technological innovation in SMEs in the hope that this will lead to higher levels of product innovation, growth and exports by these companies 319. The rationale for these policies and services should be based on better conceptualization and a better understanding of the connection between processes and product and process innovation 320. In summary, according to the literature, research and development make an important contribution to the innovation process. We can therefore assume that the fact that research and development is carried out continuously and structured, both internally and in collaboration, can be considered an important factor for success with innovations. 312 Qian G. and Li L., "Profitability of SMEs in high-tech industries: The case of the biotechnology industry", Strategic Management Journal, vol. 24, no. 9, 2013, P. Wolff J.A. and Pett T.L., "Small Business Performance: Modeling the Role of Product and Process Improvement," Journal of Small Business Management, Vol. 44, No. 2, 2006, P. Rogers E. Diffusion of Innovations. The Free Press: New York, 2006, P Becheikh. N, Landry R. and Amara N., Opcit, P Li, M. and Simerly, R. L., Environmental Dynamics, Capital Structure and Innovation: An Empirical Test, International Journal of Organizational Analysis, 10(2), 2002, P De Jong J.P.J and Vermeulen P.A., "Determinants of Product Innovation in Small Firms: A Cross-Industry Comparison." International Small Business Journal, N 24 (6), 2007, P MacPherson A.D., "Academic-Industry Connections and Small Firm Innovation: Insights from the scientific instruments sector." Entrepreneurship & Regional Development, N 10 (4), 1998, P Ouellet, P. and Raoub, L., Towards a Canada Economic Development Policy on Technology Commercialization and Innovation, Montreal: Economic Development Canada, 2006, P. Raymond L., St. Pierre J., R&D as a determinant of innovation in SMEs: essay on empirical clarification, 5th International Congress of the Academy of Entrepreneurship, 2011, p.

127Chapter 2: Overview of determinants and main drivers of innovation 1.2 Intellectual property rights/patent rights There are a number of risks associated with the development of innovation activities. In the first phase, this activity requires funds for the development or purchase of equipment, followed by the lack of certainty that the innovation will lead to its commercialization. This means that there is no insurance that covers the costs of this activity. In addition, there is the possibility that competitors can copy the innovation without having to bear the development costs. For all these reasons, the company carrying out such an activity looks for ways to protect itself against these various risks. The security means represent the company's power of disposal. Appropriation is an essential prerequisite for the company to determine whether it is able to participate in the innovation process. There are different protective measures in different forms. Some companies use patents, others use trademarks. Many other forms can be derived, for example: copyright, trade secrets, industrial design, etc. In the literature, we agree on the importance of appropriation in the innovation process, but we have little experimental information to suggest that it drives innovation favorites. A too high level of protection can indeed temporarily lead to a monopoly rent for the company, which imposes a property right and thus not only prevents competition from entering this market niche, but also discourages any research effort in the area. According to research findings, the protection of intellectual property rights is strongly associated with the propensity of companies to innovate (Baldwin, Hanel and Sabourin, 2000, SESSI, 2001). Boudewijn et al. (2000) examined the relationship between intellectual property protection and innovation and found that innovative firms are more likely to patent their inventions. But companies that have developed an IP protection strategy are generally no more innovative. Furthermore, a study by SESSI (2001) showed that the larger the company and the higher the level of innovation, the greater the willingness to patent. Brouwer and Kleinknecht came to similar conclusions and suggested that there is a correlation between the protection of innovations and the propensity to innovate. However, despite its importance, protection of innovations is not within the reach of SMEs as it is often very expensive. The excessive costs force many SMEs to give up the protection of their innovations in favor of financially stronger competitors. It could therefore be assumed that by protecting their innovations, SMEs can better protect themselves against competition and increase their innovation capacity322. In fact, the patent is filed to protect scientific discoveries, so it comes after the invention process. Patents can also be registered during the innovation process to protect the results achieved in the development process. However, the use of patents as an indicator of innovation activity can be criticized for a number of reasons. They are more related to the output of the invention process or the upward stages of the innovation process (R&D). Patents filed are not systematically transformed into innovations, and innovations are not always patented. So the probability that the number of patents is 321. Baldwin, J.R., Importance of Research and Development on the Ability to Innovation of Small and Large Canadian Manufacturing Firms‚ÄĚ, Research Papers, Statistics Canada, Research Branch Analytical, N 107, March J, Sproull L, Tamuz M., Learning from examples of one or less, Organizational Science N 2(1), 2001, p

128Chapter 2: Assessment of determinants and key factors driving the innovation of the innovations produced is weak. In addition, there are large international differences in the propensity to apply for patents. Patent data has the advantage of being easily accessible. Therefore, bibliometrics is a technique often used in innovation work. It mobilizes data on patents, scientific publications, patent citations and publication citations in scientific articles. Large databases are available and allow statistical processing. However, patents and publications are indicators of scientific production and development of disciplines rather than indicators of production of commercialized innovations. The limitations of patent indicators have led the authors to use new indicators to measure innovation activity. Firm characteristics, skills and resources 2.1 Characteristics of SMEs Firm size and age Since Schumpeter's early work on innovation, the relationship between firm size and innovation has been the subject of numerous theoretical and empirical studies. Indeed, several authors have investigated the relative importance of size as a predictor of firms' propensity to innovate, and the direction and nature of the causal influence of size on their innovation rate (Ettlie and Rubenstein 1987; Damanpour 1992; Brouwer and Kleinknecht 1996). ; Foxes 1998; Munier 2001; Becheikh et al 2006; Vaona and Pianta 2006). However, as with Schumpeter's paradox, they have not reached agreement on the influence of size on innovation performance324. According to some authors, innovation-related activities increase more than proportionally with the size of the company. Several authors emphasize more explicitly that innovation is a very costly activity and that only large companies have sufficient resources to cover the significant investments required to carry out innovation. In addition, the availability of resources in large companies gives them a margin of safety to absorb any loss due to failed innovation. 325 Other authors argue, on the other hand, that the ability to innovate is not necessarily correlated (Hage 1980 and Utterback 1974). (cited by Damanpour 1992; Rothwell, 1994; MacPherson, 1998; Love and Ashcroft, 1999; Wagner and Hansen, 2005) found that SMEs outperform large firms in terms of innovation. In general, a small company may be more innovative because it is expected to be more flexible and therefore better able to accept and implement changes caused by innovation, while in a large company there is much more bureaucracy, resulting in more difficult communication and coordination leads pre-innovation activities including R&D Le Bars Anne, "Innovation without research: Skills for innovation in agri-food SMEs", Doctoral thesis in applied economics, Pierre Mendés University France, July 2001, P Baowendsomde Eliane Olga K., " The Determinants of the Ability to Succeed in Innovation in Manufacturing SMEs", doctoral thesis, University of Quebec at Three Rivers, 2008, P. Damanpour F., "Organizational Size and Innovation", Organization Studies, N 13, 1992, P. Becheikh , N., Landry, R., and Amara, N., "Strategic factors influencing technological innovation in SMEs", Canadian Journal of Administrative Sciences, N 23 (4), 2006, p.

129Chapter 2: Overview of determinants and key factors driving innovation. Although there is no consensus on the relationship between the size of companies and their speed of innovation, the main evidence from several studies327 is that SMEs have limited innovation capabilities compared to large companies. In fact, the literature shows that SMEs face different obstacles to successfully innovate compared to large companies. Even in the most classic works on 'competition through innovation', the concept of success in relation to the resources employed will benefit from a comparative advantage at this point. With better resources to defend against copycats and to understand the uncertain impact of the intellectual investment in innovation, they could more easily accept the risks of innovation. The systematic study of innovative SMEs shows that they are not strategically disadvantaged, but demonstrate their internal organizational advantage based on agility and propensity for creative DIY or linked to their involvement in networks of persistent interdependencies. that some authors On the contrary: "The innovation efforts of small companies would be proportionally more innovatively productive than those of large companies"329. Large companies have more innovation capacity than small and medium-sized companies, especially in terms of market positioning, implementation of collaborations, implementation of research and development, financing or sales of innovations. They are also usually more competent than SMEs in the competencies that fall under the company's organizational advantages, but it is precisely in this area that medium-sized companies sometimes have an edge. Large structures therefore require significant corrective efforts to address the organizational cost disadvantages of large firms and restore the flexibility and responsiveness advantages of small firms. For small companies, learning and progress exist in the same way as in large companies, but in a different form: It is an empirical process, different from research and development in the classical sense and more of a diffusion process. / Adaptation as innovation in the narrower sense. Small firms carry out research of a different kind (informal research and development) and rely primarily on their organizational advantages. As we have already seen, the influence of firm size on innovation capacity remains relatively inconsistent. However, the arguments in the literature on this topic suggest that there is a positive relationship between firm size and innovation. Large companies not only have the resources to bear the costs and risks of innovation projects and the skills to ensure their development, but also benefit from economies of scale 330, especially at the level of research and development, production and marketing, which not only free up more resources, but also to develop the skills necessary for innovation (Becheikh and Huet, F., 327 "The self-reinforcing effects of collaborative and innovative skills: a study of French SMEs". Revue Internationale PME, N 19(1) ) , 2006, P Foray Maitresse cited by Divry Christine and Trouve Philipp OpCit 2004, P Romijn H and Albaladejo M Determinants of Innovation Capability in Small Electronics and Software Firms in Southeast England, Research Policy, 31, 2002, P St - Pierre, J . , & Mathieu, C. "Product Innovation in Manufacturing SMEs: Organization, Success Factor and Performance." Research report submitted to the Ministry of Finance, Economics and Research, 2006, p.

130Chapter 2: Overview of Determinants and Key Factors Driving Innovation al, 2006b; Huet, 2006; Tsai, 2001; De Jong and Vermeulen, 2006) 331. Furthermore, it has also been shown that large firms are more likely to produce innovations associated with a higher degree of novelty than small firms. Unlike small businesses, which are more dependent on tacit skills and often subject to greater inertia that slows down their learning and change process, large businesses generally operate on the basis of codified knowledge, which allows them to better identify and formulate the accumulated knowledge. On his side. Van DIJK et al argue that younger firms are more likely to exhibit these characteristics of adaptability, efficiency and flexibility, which tend to gradually decrease as they strengthen their position in the market. 333. These arguments lead us to believe that size and age can affect the ability of SMEs to innovate. In general, according to theoretical and empirical studies, firm size affects the emergence of innovations and the likelihood of innovation. B. Area of ‚Äč‚Äčactivity Some studies have shown that the factors associated with innovation are very different from area of ‚Äč‚Äčactivity to (Rothwell, 1974; LeBars, 2001; Souitaris, 2002; Freel, 2003; De Jong and Vermeulen, 2006). Rothwell et al showed that in the chemical industry technical factors were most important, while in the scientific instrument industry marketing skills dominated334. In addition, after a study of the resources and skills required for innovation in SMEs, LeBars shows that innovation takes place in sectors with low R&D intensity is mainly based on technical resources and not on research activities. This study also found that the innovative companies that have branches with manufacturers do not do market research, while the companies that do market research are generally companies with branches in mass distribution335. On the other hand, some authors (St-Pierre and Mathieu, 2003; Roper and Love, 2002) confirm that the maturity level of the activity can be an explanatory factor for the speed of innovation. Therefore, according to St-Pierre and Mathieu, an industry dominated by products that are not highly standardized and rarely change is likely to have a low degree of innovation. They also believe that SMEs appear to be favored in growth industries due to their flexibility, which allows them to quickly process the proceeds of R&D activities, while larger firms are favored in the mature stages of the industry as they enjoy benefit from greater productivity of their capital and economies of scale. Reviews of innovations. In this study, Souitaris 331 Bencheick et al, Opcit, 2006, P Huet, Opcit, 2006, P St Pierre Jos√©e and Mathieu Claude, Op Cit., 2004, P Rothwell, R., External networking and innovation in small and medium - large manufacturing companies in Europe, Technovation, N 11 (2), 2001, P LeBars, A., "Innovation without research: Skills for innovation in agri-food SMEs. Doctoral thesis in applied economics, Pierre Mend√®s University, France, 2001, P. St-Pierre, J. and Mathieu, C., "Product Innovation in Small and Medium Enterprise Manufacturing: Organization, Success Factor and Performance", Research Report Submitted to the Ministry of Finance, Economics and Research,

131Chapter 2: Overview of determinants and key factors driving innovation. From a sample of 105 Greek industrial companies, four sectoral groups of companies were identified on the basis of their technological development. 337: Firms dominated by their suppliers, which are generally small with weak R&D and technical skills and mainly found in traditional manufacturing sectors. Most of their innovations come from equipment and material suppliers, but some major customers and government research institutions also contribute. Large-scale producers such as car manufacturers or steel producers are usually large and produce a large part of their technological processes, devoting a significant part of their resources to them. Although specialized suppliers, such as small machinery and plant construction companies, manufacture a large part of their technological processes themselves, the focus of their innovation activity is on the development of products for use in other sectors. Unlike large producers, this type of company has a low capacity for technological diversification, and it is the users and other companies outside the sector that make an important contribution to all the innovations produced in their main activity. Science-based companies mainly belong to the chemical, pharmaceutical and electrotechnical sectors. Their main source of technology is internal research and development. They are relatively large and produce a significant part of their own technological processes, as well as a large part of product innovations used in other industries. These four business classes were examined for their speed of innovation and the factors that determine the adoption of their innovations. Regression tests show that companies in different technology trajectories had different innovation rates. In particular, innovation rates were higher in specialized suppliers and science-based companies than in industries dominated by large suppliers and manufacturers. More importantly, for each business category, several variables were significantly related to innovation. In fact, the tests show that innovation in companies that depend on their suppliers is related to factors such as competition, information gathering, technological strategy, risk attitude and internal coordination. For large manufacturers, the main driver of innovation is the ability to finance innovation and the training and experience of the workforce. For specialized suppliers, innovation is more associated with a high growth rate and exports, as well as training and bonuses offered to employees to encourage innovation. Finally, innovation in science-based firms depends on variables related to technology, workforce education and experience, growth in profitability, and town hall meetings with key customers. Based on these results, it can therefore be assumed that the field of activity has a significant influence on the SMEs' innovation opportunities. 337 Souitaris, V. Technological trajectories as moderators of firm-level determinants of innovation, Research Policy, N 31 (6), 2002, p.

132Chapter 2: Overview of Determinants and Key Factors Driving Innovation 2.2 Organizational Skills The Entrepreneur Since Richard Catillon 338 and Jean-Baptiste Say 339 have been considered the founders of the field of entrepreneurship, innovation and entrepreneurship have been linked to concepts 340. Also Schumpeter (1939) fits into this perspective by establishing that innovation corresponds to this Entrepreneur's Main Activity 341. In other words, the entrepreneur is seen as an innovator. Within an SME, the entrepreneur usually has a very strong influence on the business process, especially due to his hierarchical position 342 . He is one of the actors who initiates and implements innovations. According to Karlsson and Olsson, the entrepreneur's interest in innovation, his ability to generate new ideas and his inclination to promote intrapreneurship are key elements in maintaining a 'creative' climate that promotes the development of innovations343. The entrepreneur, according to Dubrin, is leadership, which refers to the ability to direct, influence and inspire, especially by mobilizing the enthusiasm of others around a shared vision 344; In other words, it is the ability of an individual or a management team to lead or direct other individuals or organizations to achieve predetermined goals. Moreover, several authors have identified leadership as a critical component of innovation success (Kraft 1989; Gagnon and Toulouse 1993; Karlsson and Olsson, 1998; Hoffman 1998; Rothwell, 1991; Dodgson and Rothwell, 1991; Bougrain and Haudeville, 2002, 2002, 1998; Pierre and Mathieu, 2003; De Jong and Den Hartog, 2003; Lee and Chang, 2006; O'Regan and Ghobadian, 2006, 2007, Asmaa Ghalbouni 2010). According to Carrier and Julien, innovation is primarily an entrepreneurial act that stems from the management's desire to differentiate itself from competitors and devote time and resources to innovation, and to unleash employees' creativity by connecting them to change. to promote innovation, the manager, or in the case of SMEs in particular the owner-operator, must be risk tolerant, have a positive attitude towards innovation and have the will to innovate not only to differentiate the competition but also to satisfy customers 346. According to various authors Gosselink (1996), De Jong and Brouwer (1999), McGourthy, Tarshis and Dominick (1996) and Rothwell 338 18th century banker 339 19th century economist 340 Filion, L.J. and Fayolle A., Devenir-Entrepreneur, 2nd edition Pearson Education France, 2005, Garcia, R, and Calantone, R. A critical look at the typology of technological innovation and the terminology of innovativeness, a literature review. Journal of Product Innovation Management, 19(2), 2009, P. Hivner, W., Hopkins, S. A. & Hopkins, W. E. Facilitating, accelerating and sustaining the innovation diffusion process, an epidemiological modeling approach. European Journal of Innovation Management, N 6(2), 2003, Karlsson and Olsson cited by St. Pierre Josée and Claude Mathieu, "Product innovation and performance: an exploratory study of the situation of CanadianSME", International Association for Research in Entrepreneurship and SMEs, 7th International Francophone Congress on Entrepreneurship and SMEs, Montpellier, October 2004, P Dubrin, AJ Leadership: research evidence, practice and skills. Houghton Mifflin Company, Boston, MA 2009, P Carrier, C. and Julien, P.-A., "Innovation and SMEs". In Julien, P.-A. & all (2005). SMEs: assessment and outlook. 3rd edition P, Cap-Rouge: Presses Inter-Universitaires, 2009, P St-Pierre J., "Risk management: how to improve the financing of SMEs and facilitate their development", Presses de l'université du Québec, 2004, P

133Chapter 2: Overview of Determinants and Key Factors Driving Innovation (1992) argues that the entrepreneur's commitment to innovation is critical to a firm's ability to innovate347. According to Gosselink, the entrepreneur should pay particular attention to the employees' innovation efforts. in the sense that they are the ones who generate and implement new ideas in an organization 348. For Rothwell, communication of the vision is an essential prerequisite for implementing and maintaining innovations in the long term, and therefore the entrepreneur should try to implement the innovations in business, by communicating his vision to the employees 349. Every employee should understand the importance of innovation, including the entrepreneur's ability to share his vision. Managerial leadership is said to influence employee attitudes toward innovation. In a study of 194 high-tech companies, O'Regan and Ghobadian examined the relationship between innovation, leadership, and innovation performance. Their results suggest that the degree of innovation, the probability of success and the development of the skills necessary for effective innovation are influenced by the leadership style of the organizational leader. In particular, these authors showed that the transformational management style of HR is an important contributor to innovation and new product launches, while transactional management is more associated with adaptation of existing products350. In another empirical study, Lee and Chang reached similar conclusions. They analyzed employees' perceptions of the relationship between companies' innovativeness and management styles based on responses to a survey of 335 employees in ten listed companies. The results show a positive correlation between the two dimensions of leadership style, namely inspirational and transformational leadership styles, and innovative capacity.351 In addition, other studies suggest that a leader's effectiveness in the innovation process also depends on personal characteristics. For example, St-Pierre and Mathieu examined the role of the entrepreneur and the internal environment in product innovation in 350 Canadian SMEs. Their research shows that most highly innovative companies are led by the founder, who usually shows more interest in R&D activities and in the growth of his company. In addition, he generally has a technical background and is therefore production-oriented 352. They describe him as a modern entrepreneur who is proactive because he supports the growth of his company. 347 St-Pierre J., Opcit, P Norrin H., Etienne St-J., Innovation in SME, Communication for the 5th International Congress of Academy of Entrepreneurship 2010, available on the website: Rothwell, R. Successful industrial innovation: Critical factors for the 1990s. R&D Management, N 22(3), 1992, P. O'Regan, N. and Ghobadian, A., Leadership and its implications for the use of process technologies and management practices in manufacturing. International Journal of Business Performance Management N 9(4), 2009, P Lee, M.-C. and Chang, T., Applying TOM, CMM and ISO 9001 in Knowledge Management to Improve the Software Development Process. International Journal of Services and Standards, N 2(1), 2006, P St. Pierre and Mathieu, Opcit, P

134Chapter 2: Overview of determinants and key factors driving innovation. According to Romelaer, innovation management can be analyzed as a process of mobilizing resources and skills to improve the company's innovative capacity and performance.353 Many factors determine the chance of success for the innovative entrepreneur. These factors can be summarized as factors related to the entrepreneur's profile (his characteristics, knowledge, etc.) and to his internal and external environment. On the psychological level, the entrepreneur must in any case have a certain openness to new ideas. If we find that the fact that he has an internal locus of control ie. H. that he believes that what happens to him is mainly due to his actions will generally lead him to propose a strategy based on product innovation, his need for achievement meanwhile is, has nothing to do with innovation 354. The above Furthermore, it seems that the 'proactive' personality of the entrepreneur in combination with Snow (1978) who refers to a creator of change who constantly explores possibilities, has a great influence on innovation355. The management style advocated by the entrepreneur will influence the mode of production by focusing it on innovation356. A more flexible style and an aggressive management approach, i.e. H. the confrontation with the competitors will therefore lead to a more innovative production method357 The entrepreneur's desire to increase growth is also positively related to strong innovation in the SME context. In fact, we find that the innovative entrepreneur differs from other citizens by certain characteristics: strong need for personal achievement, self-realization, becoming a world leader, initiating and creating, valuing the results of his research. He is the one who starts new businesses and takes the financial risks to achieve his vision and goals. The need for autonomy and creativity are also important factors because he wants to be more free and independent in his actions and ventures, to be independent and to do what he likes and have fun. What helps the innovative entrepreneur to succeed in his work is also the need for power, which is expressed in the financial success of the commercial exploitation of his research. In Schumpeter's view, it is only when an individual is certain that he will reap the rewards of his efforts that an individual begins to benefit from a monopoly, even if only temporarily. Other individual characteristics also emerged, such as the influence of family background, primary education, work experience, acquired skills, values ‚Äč‚Äčand mental representations. The decision to develop an innovation, when made by for-profit actors, inevitably involves their ability to seize unexploited economic or technical opportunities. The entrepreneur is the key player able to transform a simple network into synergistic clusters of companies and technologies that enable the development of new opportunities. 353 Romelaer, P., Learning in organizations. Management and game theory, in Thepot J. (ed.), FNEGE, 1998, P Midler C., "Management models and economic regulation of design". In Gd Terssac, E Friedberg (eds.), Collaboration and design. Octares Editions: Toulouse, 1996, P Kim W, Mauborgne R, Blue Ocean Strategy. Harvard Business School Press: Boston, MA, 2005, P. Hadjimanolis, A. A resource-based view of innovation in small firms. Technology Analysis & Strategy Management, N 12(2), 2000, P. Wtterwulghe Robert, "The SME, a Human Enterprise", Boeck edition, 1998, p.

135Chapter 2: Overview of Determinants and Key Factors Driving Business Innovation. While some entrepreneurs are quicker to seize opportunities and take risks, not all can capitalize on them effectively. The entrepreneur's sometimes too much influence on his company can sometimes lead to the company lacking skills and using insufficient innovation strategies. Since the current manager is the founder, this also seems to have an impact on innovation, as those who start their business have more innovative businesses than the others. This can be explained by the fact that, in this particular case, it plays a role as a catalyst for competencies outside the company by coordinating the flow of information generated by these interactions. a business network that stimulates innovation, the role of the entrepreneur in developing and maintaining these contacts becomes crucial. Regarding the education and experience of the latter, having an education in science or engineering, but not in management or finance, and experience in a large company positively affects the innovation of the SME from 359. The same is true, a finding can is observed for high-tech SMEs: education of the entrepreneur has a positive influence on innovation. On the operational side, despite the heavy workload they generally take on, entrepreneurs still tend to lead innovation projects themselves rather than delegate them. This partly means that not enough time is spent on the development of innovations and partly explains the negative impact of a lack of time on the innovation project. As a result, the entrepreneur's involvement in the development of innovations can sometimes have negative consequences for him. 360. Compared to the so-called socialized entrepreneur (who starts his business to escape poverty), they excel in certain basic tasks: they attract and retain innovators, formulate a clear innovation vision and priorities, map the path to achieve their vision, and mobilize people to accept risk, support new ideas, build and support complementary teams of champions and build a culture of innovation. Still, it should be noted that there is no such thing as a "dear leader" who will efficiently and quickly create innovative products, as it all depends on the kind of work that needs to be done to get there. As can be seen, the entrepreneur has a direct impact on the innovation process in SMEs, especially through the way he controls the interaction with other members of the organization and external actors. However, this type of management does not only depend on itself, but also on the context in which it develops. The literature shows that the manager, or more specifically the owner-manager in SMEs, should be risk tolerant and have an attitude to promote innovation. 358 St Pierre and Mathieu, Opcit, P BenMahmmoud-Jouini S, Midler C. "Competition through innovation and the dynamics of design systems in French companies". Reflections on the confrontation between three sectors. Entreprises & Histoire(23), 1999, P. Thomke S., Fujimoto T., The impact of frontloading problem solution on product development performance. Journal of Product Innovation Management N 17(2), 2009, p

136Chapter 2: Overview of the determinants and key factors that drive positive innovation in terms of innovation and the desire to innovate, not only to differentiate from competitors but also to satisfy customers (De Jong and Brouwer, 1999; De Young and Den Hartog, 2003). ) 361. In SMEs, the entrepreneur can therefore be seen as a key factor in this mobilization process. His ability to communicate with internal and external stakeholders, his desire for growth and his strategic vision for innovation will influence the innovation, the process and the resources and skills he will devote to it. the performance of this activity. It can therefore be assumed that the development of managers increases the innovation capacity of SMEs. B. Human resource management According to some studies (Michie and Sheehan, 2003; Souitaris, 2002; Laursen and Foss, 2003; St-Pierre and Mathieu, 2003; Romijn and Albaladejo, 2002), good human resource management (HRM) would be a major influence on the success of the innovation. HRM appears to be one of the strategic elements for implementing innovations in companies. There are certain HRM practices that can help companies increase their innovative capacity. Such practices relate in particular to the recruitment of qualified employees, employee training and employee recognition and retention systems. In fact, innovation often requires the acquisition of new skills, including strategic, technical and marketing skills. Therefore, a training program will enable employees to acquire such skills and help build the individual and organizational capabilities needed to meet innovation demands. Furthermore, by increasing employee motivation, recognition would maximize their effectiveness and contribute to the overall well-being of the organization. Also, giving out rewards would help boost employee morale and also retain creative employees. All in all, it should strengthen the companies' ability to innovate. In a study by Romijn and Albaladejo, where they investigated the determinants of the innovation capacity of 50 SMEs with less than 250 employees, they found that the existence of formal training programs to maintain and improve the knowledge and skills of employees increases the innovation rate of SMEs. 362 . Another study conducted by St-Pierre and Mathieu on 343 SMEs in the manufacturing industry shows that there is a positive and significant relationship between HRM practices and the level of 'innovation'. This means, and according to the results obtained, that the most innovative SMEs are those that have implemented most of the HRM practices relevant to the current context, such as a recruitment policy and a profit sharing scheme.363 The latter are also complementary . These practices have more extensive training activities, including a higher budget and greater use of tailored training activities aimed at training staff according to the specific needs of the company. Another study was conducted based on data from the Skills to Innovate survey conducted by SESSI among a large sample of 5,000 French manufacturing companies with more than 20 employees. Galia investigated the skills and 361 St Pierre, Opcit, P Romijn, H., & Albaladejo, M. “Determinants of innovative capacity in small electronics and software firms in South East England, Research Policy, N 31, 2002, P St Pierre and Mathieu, Opcit, P

137Chapter 2: An overview of determinants and key factors driving innovation HRM practices from an innovation perspective. The results of the study show that the employment rate of HRM skills and practices is 50% for the general population, while this rate is 60% for innovative companies with a structured HRM strategy; 90% of them use teamwork almost systematically and in 60% of cases innovation occurs in work teams structured around projects. For the latter, establishing an incentive policy can give innovation and creativity a strategic place. In addition, recruitment within these innovative companies is based on the ability to work in a team and the ability to innovate. In addition, most have training policies that include an assessment of needs and the coherence of individual choices, enabling the mobilization and improvement of existing skills and access to new and complementary skills. The results also show that incentive and evaluation practices that enable the formulation of ideas and creativity are more common among product innovators than process innovators. Overall, human resource management remains a dominant skill regardless of the type of innovation undertaken. Another study was conducted by Laursen and Foss, which aimed to analyze the impact of new HRM practices and their complementarity on innovation performance using a sample of 1900 Danish manufacturing and non-manufacturing companies. Overall, 9 HRM practices were examined, including those related to interdisciplinary work teams, compensation, quality circles, job rotation plans, employee suggestion collection systems, delegation of responsibility, job integration, and internal and external training. Using principal component analysis, the authors identify two sets of HRM practices that significantly and positively promote innovation. The first system includes practices such as interdisciplinary work teams, employee suggestion programs, job rotation plans, quality circles, job integration, and rewards and delegation of responsibility. The second includes those that relate only to internal and external training programs. The results show that the practices in the first system complement each other and, when applied simultaneously, contribute to higher innovation performance. The same also applies to the other system. This suggests that innovation success increases when multiple HRM 365 practices are used simultaneously. of overall quality management and the ability to successfully innovate in a selection of 102 manufacturing companies. Their results show that the practices associated with HRM promote the dissemination of information and knowledge as well as the motivation to perform better and the employee empowerment necessary to build the innovative capacity in companies. In this sense, we can conclude that teamwork, staff training is related to quality, the existence of a system of rewards for work well done and the selection of 364 Galia, F., "Skills and personal management in French industry from a Perspective of Innovation", Proceedings of the 3rd Forum on the Prospective of Professions, "Competence and Time in Human Resources Management", Laursen, K., & Foss, N.J., "New Human Resource Management Practices, Complementarities, and the Impact on Innovation Performance , Cambridge Journal of Economics, N 27(2), 2003, p

138Chapter 2: Overview of the determinants and key factors that drive personal innovation in line with the company's competence needs and lead to better innovation capacity. 366. In short, according to the literature, the most innovative SMEs focus on practices such as employment analysis, training or development programs, and employee recognition and retention schemes. It can therefore be assumed that formal personnel and personnel policies make an important contribution to building competent, satisfied, motivated and high-performing employees and thus increase the success of innovation. versus SMEs' organizational form and flexibility Implementation of innovation-promoting business practices is a complex process that may require significant changes in the structure and work processes of the company. In fact, the development of innovations depends to some extent on the commitment and involvement of the various employees in the innovation process, as well as the organization's ability to collect information, integrate it effectively and create a working climate that supports all practices, methods and exercises. Therefore, a company must , who wants to innovate, naturally be able to change its organizational structure if necessary. Very few studies have examined organizational structure as a determinant of firms' ability to innovate. However, several arguments support a positive correlation between the ability to integrate organizationally and the creation of innovations. In fact, it is increasingly recognized that work organization plays a fundamental role and is an important driver of technological innovation. Companies that develop new products or processes are also considered organizationally innovative (Ayerbe, 2006; Gopalakrishman and Damanpour, 1994) 367. Accordingly, work organization is said to have a significant impact on the innovation process, be it the processes. The few studies (Ayerbe, 2006; Gopalakrishman and Damanpour, 1994; Prajogo and Ahmed, 2006) that have investigated the impact of organizational determinants on innovation suggest that an organizational structure is soft, flexible, open to change and conducive to cross-functional cooperation as well as the transformation and dissemination of information significantly stimulate the development of innovations 368. Strebel concludes in his research that radical innovations are developed in organic organizations, i.e. H. more flexible to environmental fluctuations, while incremental innovations are found in more mechanistic structures. 369 Other authors point out that all innovations require flexible and opportunistic organizations. They add that the importance of these characteristics is greater with incremental innovation, which is contrary to 366 Perdomo-Ortiz, J., Gonzalez-Benito, J. and Galende, J., Total Quality Management, as a precursor to business innovation capability . , Technovation, N 26(10), 2006, P. Bencheick et al., Opcit, P. Perez, R., Brabet, J., & Yami, S., Management de la Comp√©titivit√© et Emploi‚ÄĚ, eds. L' Harmattan, Paris, 2004, P. Strebel P., Organizing for innovation Over an Industry Cycle, Strategic Management Journal, Vol 8, N 2, 1987, p.

139Chapter 2: Overview of determinants and key factors driving innovation Strebel 370. On the other hand, several authors report that the degree of professionalism in an organization in research leads to very contradictory results, ranging from a positive effect on innovation to none . Effect, and even a negative effect. Similarly, the authors Fleischer & Al. that the influence of complexity, formalization and centralization on innovation is not very clear371. Zaltman explains this ambiguity by saying that these elements can sometimes be useful for innovation and sometimes harmful: it all depends on the stage of the innovation process considered flexibility 373. The latter allows them to be in a favorable position within the framework of incremental innovations (Dodgson, 2000; Georgsdottir et al., 2003; Major and Cordey-Hayes, 2003; Scozzi et al., 2005) or when economies of scale are lacking 374. The flexibility of SMEs can in particular lead to an improvement in the speed of response to changes thanks to the internal cohesion favored by the small number of employees 375. For example, in the case of small high-tech companies, this cohesion turns out to be decisive for the commercial success of a new innovative product. 376 Characteristics seem to be decisive for the process of introducing innovations. 378. They give SMEs more opportunities to solve internal problems and adapt more quickly to external changes. Regarding the study, Prajogo and Ahmed examined the relationship between the determinants of innovation, innovation capacity and innovation performance. The analysis of data collected from 194 managers of Australian companies shows, on the one hand, that factors such as the quality of the working atmosphere, the involvement of the employees, the dissemination of information and the communication between the different teams have a statistically significant influence on the quality of the working environment and, on the other hand, that innovation ability is positively associated with innovation performance. However, the relationship between these factors and innovation performance is not significant. This suggests that innovation is a mediating factor in the relationship between innovation and innovation. In other words, the quality of the work environment, the participation of employees, the dissemination of information and the communication between the different work teams strengthen the innovative capacity, which in turn improves the company's performance. Innovation Julien et Carrier, Opcit, P Tornatzky L, Eveland J, Boylan M, Johnson EC, Roitman D, Schneider J., The Process of Technological Innovation, Reviewing the Literature, National Science Foundation, Washington D.C., 1983, P Zaltman G, Duncan R, Holbeck J., Innovations and Organizations. John Wiley & Sons, New York, 1983, P. Wolff and Pet, Opcit, P. Vossen, RW, "Relative Strengths and Weaknesses of Small Firms in Innovation", International Small Business Journal, N 16(3), 1998, P Dodgson M & Rothwell R Technology Strategy in Small Businesses Journal of General Management N 17(1) 2000 P Yin R Case Study Research. design and methods. (3rd edition). Sage Publications: Thousand Oaks, CA Shefer, D., & Frenkel, A., Local Environment and Innovation: Some Empirical Findings. The Annals of Regional Science, 32,2004, P Julien and Carrier, Opcit, P Prajogo, D. 1., & Ahmed, P. K., Relationships between innovation incentive, innovation capacity and innovation performance, R&D management, N 36(5) , 2006, pp

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140Chapter 2: Overview of determinants and key factors that drive innovation d. Working environment and strategic orientation In short, it is human factors and not technology that stimulates innovation. Efforts should therefore be focused on creating and maintaining an environment that supports innovation, so that employees are not only motivated to innovate, but are also able to be 380% innovative. For example, a flexible and adaptable organization promotes the company's adaptation to the changes brought about by innovation, which increases creativity and thus the level of innovation. Koberg, Uhlenbruck and Sarason find that the flexible organizational structure of young firms, by enabling them to clarify roles and reduce ambiguity, improves their efficiency and thus increases their ability to innovate, while the range of activities in more mature firms expands. a A long hierarchical chain weakens the ability to innovate because of this sophisticated formalism 381. The working environment in a company is therefore a prerequisite success factor for innovation. A positive organizational climate promotes employee loyalty and their physical and mental well-being. This strengthens the mobilization of personnel and the creation and transfer of knowledge in the company 382 and thus stimulates innovation. In a study of product innovation best practices, the authors found that the most successful product development companies fostered a climate and culture that enabled the development of organizational dynamics that fostered innovation. Innovation 383. Assuming that innovation depends on a combination of flexibility and agility, Control Heunks investigated the impact of flexibility and control on SME innovation and conducted a survey of 200 European SME managers. The results suggest that R&D is strongly associated with a combination of flexibility and control, but that flexibility gains a certain predominance384. Therefore, it can be assumed that by implementing a flexible organizational structure, a company will develop a climate innovation-friendly working environment that will increase its ability to innovate successfully. In terms of strategic direction, the SME strategy seems to influence two aspects related to innovation in SMEs: the type of innovation that is developed and the success of the innovation. In terms of type of innovation, the strategic orientation seems to be able to distinguish between radical innovations originating from 'potential' SMEs and incremental innovations, which are more often developed by 'suited' companies.385 These guide research and development Investment decisions that influence innovation in SME context. The second aspect concerns the success of the innovation. Customer or market orientation affects the quantity of new innovative products launched by SMEs and the success of their launch at 380th Prajogo, D. 1., & Ahmed, P. K., Relationships between innovation momentum, innovative capacity and innovation performance, R&D Management, N 36(5), 2006, P Becheikh et al., Opcit, P Lebeau, D., & Vinais, J., "For Strategic Management of Innovation in Manufacturing. Science and Technology Council, Cooper, R.G., Edgett, SJ, & Kleinschmidt, EJ, Best Practices in Product Innovation: What Distinguishes Top Performers, Ancaster, Ontario: Product Development Institute, 2003, P Heunks, FJ, Innovation, Creativity and Success, small Business Economies, N 1 0,2009, P Q'Regan , N., & Ghobadian, A., Strategic Planning: A Comparison of High- and Low-Tech Manufacturing Small Businesses, Technovation, N 25(10), 2005, p.

141Chapter 2: Overview of Determinants and Key Factors Driving Market Innovation 386. It then enables the development of innovations and these affect firm performance. In addition, the connections the small business makes help achieve the entrepreneur's performance goals387. These connections would make it possible to obtain important strategic information from customers, not only to guide innovation, but also to increase research and development productivity. If we mention high-tech SMEs, the managers' strong will to innovate seems to be a catalyst for monitoring activities, especially aimed at obtaining strategic information about customer needs. - Management and supervisory activities are also evident in SMEs in the manufacturing industry. This was investigated in 1999 by Julien and Al. In summary, relationships with the outside world play an important role in the development and success of innovations. 2.3 Resources The availability of a range of resources has also been identified by several authors (Huang, Soutar and Brown 2001; St-Pierre and Mathieu 2003; Freel 2003; Romijn and Albaladejo 2002; Landry, Amara and Lamari 2002) as a determining factor for the ability to succeed with innovation. Because innovation is a complex and costly activity, its implementation requires the company to have sufficient resources. 389. Having sufficient resources for innovation means that it is in line with the innovation strategy. that is, the company ensures that it has the resources to implement its strategy 390. In fact, the innovation process would require qualified and skilled personnel as well as technical resources to exploit new technologies and translate new ideas into new products or processes. Innovation and marketing skills to optimize marketing. Some studies (St-Pierre and Mathieu 2003; Freel 2003; Guangzhou Hu 2003; Koeler 1996; Koschatzky, Bross and Stanovnik 2001; Romijn and Albaladejo, 2002; Shefer and Frenkel 1998; Souitaris 2002; Hadjimanolis 2000; Becheikh et al. 200666666666666666 6666666666666666666666666666 Crazy and De la Fuente 2010 was able to demonstrate the importance of the availability of resources for companies' tendency to innovate.391 In general, the literature mentions human, technological and financial resources that have a significant impact on the emergence of innovations. The limited ability of SMEs to attract qualified personnel can slow down their pace of innovation, which is particularly beneficial for the large companies that can attract and offer them opportunities.386 Salavou, Energy and Innovation: Structural Change and Policy Implications, Perdue University Press edition. , France, 2004, P. Laursen, K., & Foss, N.J., “New human resource management practices, complementarities and the impact of our innovation performance. "Cambridge Journal of Economics, N 27(2), 2009, P Audet, J., "Strategic intelligence in high-tech SMEs: a case study through cross-site comparisons", Revue Internationale PME, N 16(2), 2007 , P. Bencheick, Opcit, P. Doyle, A., "Making sure you have sufficient resources for innovation" SME Development, Chaudière-Appalaches, Article N 4, 2007, P Olga Eliane, Opcit, P

142Chapter 2: Overview of interesting determinants and key factors driving innovation. On the other hand, smaller size can lead to greater appreciation of talent and better recognition of individual achievements, unlike a large company, which is often more impersonal. It is widely recognized that the quality of human resources has a significant impact on the ability of SMEs to innovate. In fact, the early stages of the innovation development process require specific knowledge and skills that may be the key to later development.392 The skills that the company possesses through its employees would not only enable it to transform internal and external information that they inform . 393, but also the various other resources, especially marketing, technical, technological and computer resources, to ensure the implementation of the innovation and its commercialization. Various authors such as Freel 2003; Guangzhou HU 2003; Koller 1996; Koschatzky et al., 2001; Romijn and Albaladejo 2002; Shefer and Frenkel 1998; Suitaris 2002; Hadjimanolis 2000; Becheikh et al argue that well-educated, technically skilled and highly experienced workers from diverse backgrounds are an important factor in stimulating innovation 394. This is further justified by the fact that several SMEs often highlight the lack of qualified staff as one of the biggest obstacles. for innovation in their innovation activities. The role of the human factor in the innovation process has recently evolved around the concept of skills395. For example, in the specific case of product development, Deschamps and Nayac distinguish between four levels of technical and managerial skills of people who 396. This includes basic knowledge or basic knowledge acquired through training (initial or continuous), the ability to practically apply this knowledge to solve problems, manage processes in a cross-functional framework and develop a strategic vision to achieve a specific goal by making relevant decisions taking into account the constraints associated with the actions of competitors in particular. In addition, Carrier and Julien confirm that innovation is encouraged by the presence of people with technical skills, i.e. H. Engineers, technicians and designers who not only complement other employees' new ideas or implement customer ideas, but can also act as a catalyst. to encourage other employees, as well as technological gateways to search for additional information or organize this information to support innovation 397. Some studies (Viding, 2006; Romijn and Albaladejo, 2002) have shown the important role that company personnel play in determine the emergence of innovations. Vinding recently investigated the influence of human capital on the absorptive capacity of 392 St. pierre.j and Mathieu.C, ‚ÄúProduct innovation in SMEs in the manufacturing industry; Organization, success factor and performance‚ÄĚ. Research report submitted to the Ministry of Finance, Economics and Research, Canada, 2003, P Croteau J, "Product Innovation in Small and Medium Enterprise Manufacturing: Relationships between Operations, Resources and Speed‚Äč‚Äč‚Äč‚Äč‚Äč‚Äč of Innovation", MSc Thesis in Small and Medium Enterprise Management and their business environment, University of Quebec at Trois Rivi√®res, 2003, P Olga Eliane, Idem, P Perez R et al. "Management of competitiveness and employment", Paris, L. Harmattan, P. Perez R. et al. Op cit P Carrier C. and Julien PA, "Innovation andSME", cited in "SMEs: Assessment and Perspectives", Cap Rouge, Interuniversity Press, 3rd edition, 2005, p.

143Chapter 2: An overview of the determinants and main drivers of innovation 1544 manufacturing and service companies 398 in relation to their innovation performance showed that the average share of highly educated workers has an impact on innovation readiness in both types of companies, as the degree of innovation increase increased with the increase in the number of employees with a university education. The results of Romijn's and Albaladejo's research also point in the same direction399. By investigating the determinants of the innovation capacity of 50 small English firms with less than 250 employees in the computer, electronics and clothing sectors, these authors also emphasized the relationship between workforce skills and the creation of innovations, both incremental and radical. According to this study, the share of engineers and designers with a university degree in total employment is strongly correlated with the ability of companies to innovate, both for radical innovations and for incremental innovations. So it is clear that the more companies invest in highly tech-savvy employees, the more innovations they will achieve with a high degree of novelty and technological complexity. On the other hand, various studies confirm that, in addition to employees' knowledge and skills, their commitment and participation in innovations are also important prerequisites for their success. Some studies have even shown that employee participation has a positive effect on innovation, whether in the development and launch of new products, the speed of new product development or R&D in various ways400. Firstly, through employee participation. better understand the goals the company wants to achieve and be more engaged in the implementation of the strategies implemented by the management team. In addition, employees have more autonomy to suggest improvements because they know that these suggestions will be taken into account and that big innovations are often the result of the accumulation of these small improvements. Finally, these practices emphasize the dissemination of information and knowledge within the organization. In a study of 4,264 people from 89 small family businesses, Gudmundson, Tower and Hartman showed that the initiation and implementation of innovations is significantly improved when employees are involved in 401 decisions. Similar results came from Nielsen and Lundvall, who investigated the extent to which direct or indirect employee participation affects innovation in a sample of 2000 Danish private companies. The results of their research showed that companies that combine several organizational characteristics related to the learning organization are more likely to develop new products than others. Moreover, the most innovative companies are much more likely to involve their employees in various forms of direct and indirect participation than the others. Vinding A.L, "Absorptive capacity and innovative performance: A human capital approach." Economics of Innovation and New Technology, N 15, P Romijn and Albaladejo, Determinants of Innovative Capacity in Small Electronics and Software Firms in the South East of England, Research Policy, N 31, 2002, P Lebeau, D., & Vinais, J ., "For Strategic Innovation Management in the Manufacturing Industry". Science and Technology Council, Gudmundson, D., Tower, CB and Hartman, EA., Innovation in Small Businesses: Culture and Ownership Structure Do Matter, Journal of Developmental Entrepreneurship, N 8(1), 2003, P Nielsen, P., and Lundvall, BA, Innovation, learning organizations and industrial relations. DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies, DRUID Working Papers numbered 03-07, 2007, p.

144Chapter 2: Overview of determinants and key factors driving innovation. For example, previous studies show that the presence or recruitment of personnel with different skills, especially technical, marketing and engineering skills, increases the innovative capacity of SMEs. The fact that a company involves its employees in the various activities also promotes innovation. B. Financial resources Financial resources are the resources a company has available to support the performance of its daily activities and its development projects, e.g. B. Ensuring innovation from the birth of the idea to its commercialization. In order to innovate, the entrepreneur must therefore be prepared to invest. While some innovations often occur spontaneously, most innovations are quite expensive and the return on investment is uncertain and occurs only at the end of the process, often even in the medium or long term. Therefore, innovation requires the presence of "patient" financial resources. According to Becheikh et al., financial autonomy, i.e. H. the level of equity versus debt, good financial results, the availability of funds and a budget to finance innovation activities, all elements that seem to have a positive and significant impact on Innovation 403. Several authors (Galende and De la Fuente, 2003) ; De Jong and Brouwer, 1999; Greiger and Cashen; 2002) suggest that financial autonomy and profitability increase the likelihood of investing, conducting internal research and development, and thus producing innovations internally rather than importing them. Among other things, this can reduce the risk of copying by competitors 404. Since innovation activities are also risky activities, Galende and De la Fuente need high debt, although this undermines the development of incremental innovations because it does not prevent innovation from taking development of radical innovations seriously 405. Similarly, Gosselink mentions the availability of financial resources as a decisive factor for the ability to innovate, in the sense that an entrepreneur or an employee knows that the financial resources available to develop ideas , are limited. will not be strongly motivated to produce and even develop ideas that cannot be translated into innovations 406. Furthermore, according to Najssen, the amount of financial resources needed for innovations strongly depends on the company's innovation strategy. In terms of innovation, the company has four strategic positions to choose from 407. It can position itself as Prospector, Defender, Analyzer or Reactor. - Prospectors are companies that are constantly looking for new market opportunities. They show a very active attitude in the development of new products. In general, they are the cause of change and the source of radical innovation in many markets. 403 Becheikh et al. "Strategic Factors Influencing Technological Innovation in Manufacturing SMEs" Canadian Journal of Administrative Sciences, N 23(4), 2006, P Olga Eliane, Opcit, P Galende J. and De la Fuenta JM, "Internal Determining Factors Innovative Influencing Firm Behavior, Research Policy, N 32(5), P De Jong J.P and Vermeulen P.A, ‚ÄúDeterminants of Product Innovation in Small Firms: A Cross-Industry Comparison.‚ÄĚ International Small Business Journal, N 24(6), 2006, P De Jong J.P and Brower E., ‚ÄúDeterminants of SMEs' ability to innovate: literature review. Zoetermeer, EIM Small Business Research and Consultancy 1999, pp. 67-141

145Chapter 2: Overview of Determinants and Key Factors Driving Innovation ‚Äď Unlike gold miners, advocates spend very little time looking for opportunities to develop new products. Their activities are mainly aimed at improving productivity and efficiency. They usually focus on serving niche markets. - The innovation strategy of analysts coincides with that of prospectors and defenders and varies according to the characteristics of the market. Thus, in a stable market the analyzer will behave like a lawyer by focusing on productivity and efficiency, while in a dynamic market he will behave like a gold digger and be more innovative by focusing on change and improvement. Development of new products. - The reactors are companies that do not have a coherent innovation strategy. They simply respond to changes in their environment when forced to. Based on these strategies, Najssen speculates that a prospector should have more financial resources compared to a lawyer to support the innovation process, including allowing employees to experiment with new ideas. When creating innovations, it is important to emphasize that these results are in perspective, as other studies have shown that the relationship between financial resources and innovation is not always linear. For example, Greiger and Cash's findings suggest that the availability of financial resources is a decisive factor for innovation, but that too high a level of available and attainable financial resources can create a relaxed environment and thus lead the manager to discourage innovation efforts. . C. Technological resources Technological resources are all formal (tools, methods, etc.) or informal (knowledge, know-how, etc.) resources that enable a company to design, produce, maintain and adapt everything in a sustainable and competitive way and to develop profitable economic activities within its reach 410. According to St-Armand, technological means refers to technical means, i.e. H. technical artefacts such as instruments, tools, machines used to carry out productive activities in the organization, but also the processes, patents and methods associated with them 411. In this sense we could consider information and communication technologies (ICT) as a subcategory of technological resources. Regarding innovation, several studies have shown that the search for new technologies and the acquisition of advanced production equipment and technologies have a significant impact on innovation, whether small or 412. Carrier and Julien point out that the quality of technological resources is one of ‚Äč‚Äčthe most important factors in SMEs Key variables 408 De Jong J.P. and Brower E., Opcit, P. Greiger S.W. and Cashen L.H., "A multidimensional study of Slack and its impact on innovation", Journal of Management Issues, N 14(1), 2002, P. Morrin J., "The management of technology resources", he shares his experience with European Industry, Canadian Association of Advanced Technologies (ACTP/CATA), 12 May 1995, Sheraton Center in Montreal, available locally: St Armand G. and Renard L., "Capacity or Organizational Skills Development: What is Related to Organizational Skills" , ESG-UQAM Research Notebook, Doc N, P Becheick & al, Opcit, p 89 142

146Chapter 2: Review of determinants and key factors driving innovation to increase the level of innovation 413. However, these resources need to be regularly updated by renewing and applying them appropriately through practices such as training, adaptation and learning. Romijn and Albaladejo, for their part, have shown that the company's ability to innovate does not only depend on the education and professional experience of the company's directors and employees, but also on the extent to which internal technological efforts are made to drive innovation after 414. the results of their study show also that expenditure on R&D efforts and the number of technology licenses obtained are related to the likelihood of innovation; The company's research and development effort, measured by the percentage of employees dedicated to research and development and the percentage of sales devoted to research and development, correlates strongly and positively with both the innovation degree of novelty and the degree of technological intensity. Similarly, the number of licenses purchased correlates positively and significantly with these two indices. This suggests that R&D efforts and technology licensing not only stimulate innovation in a quantitative sense, but also the implementation of innovations associated with a higher degree of novelty. In a study of 440 manufacturing companies, Landry et al. showed that a positive relative change of 10% in the index of the number of different advanced technologies used in manufacturing increases the speed of innovation by 1.3% and increases the degree of radicality of innovation with 2.02 per cent. in abundance in the same spirit. Their study, conducted among 247 medium-sized manufacturing companies, also shows that the number of advanced technologies used in the production process has a clear positive influence on both innovation readiness and novelty. According to this study, a positive relative change of 1% in the number of people engaged in research and development and the number of advanced technologies used in manufacturing processes increases the probability of innovation by 0.94% and 0.62%, respectively, and the degree of novelty Innovation of 0.67% and 0.2% respectively 416. In short, it can be assumed that the use of advanced technologies in production processes promotes innovation in the company. The company by enabling better production efficiency through a significant reduction in lead times and production costs for products or processes. In general, the literature suggests that innovation requires different resources. The existence of diverse resources in sufficient quantity seems to be a necessary condition for the success of innovation. The availability of resources will therefore increase the capacity of SMEs to innovate. 3 Relational determinants 3.1. The external environment of SMEs 413 Carrier C. and Julien P.A., Opcit, P Romijn H. and Albaladejo M., "Determinants of innovation in small electrical and software firms in South East England." Research Policy, N 31, 2002, Landry R., Amara N. and Lamari M., "Does Social Capital Determine Innovation?" To what extent? Technological Forecasting and Social Change, N 69, 2002, P Becheikh, Opcit, pp. 57 143

147Chapter 2: Overview of determinants and key factors driving innovation. There are different levels of analysis to study the influence of the external environment on the innovation process in SMEs. The highest level concerns the national innovation system of the country where the SME operates (Freeman, 1995; Kim, 1993; Lundvall, 1992; Nelson, 1993; Niosi et al., 1993; OECD, 1997; Sornn-Friese, 2000) . . . Other authors also talk about regional or local innovation systems (Amara et al., 2003; Doloreux, 2004; Fritsch, 2001, 2003; Mytelka, 2000; OECD, 1997) or technological systems (Carlsson and Stankiewicz, 1991). From a more "micro" point of view, they can also be networks, clusters or chains 418. These different levels of analysis are only specific perspectives to illustrate the importance of certain elements in the innovation process. . From an SME perspective, we need to think about the connections and interactions that this creates. For example, SMEs seem to deal more often and more closely with their immediate business environment: their customers, their suppliers and, to a lesser extent, their competitors. Nevertheless, the number of external relations strongly depends on the domains of activity, which have a significant impact on the level of innovation in SMEs, where one can find more innovative sectors than others 419. Compared to large companies, SMEs have fewer alliances, probably due to their more limited resources and capabilities and because of the less diversification of their technological resources, will collaborate more in R&D 420. This is explored in more detail in the networking section. Ugly. The environment The company's scientific environment appears to be an important factor for product and process innovation due to the more frequent connections with local universities421. 422. In addition, certain SMEs' proximity and regular interaction with public R&D and training organizations play an important role in explaining innovation and the speed of adaptation to changes in the environment of interest 423. These SMEs will also place greater emphasis on external sources of information. One of the obstacles to building strong links between SMEs and universities could well be the difficulty of transferring complex knowledge between two entities that do not use the same language and codes. To this end, mediators seem to facilitate this transfer. 417 Hallilem Norrin and Etienne St Jean, Communications 5th International Congress of Academy of Entrepreneurship and Innovation "Innovation in SMEs: Proposal for a Conceptual Framework" Laval University Quebec Canada, Dodgson, M. and Rothwell, R. Technology Strategies in Small Firms . Journal of General Management, N 17(1), 1991, P. De Jong, J.P.J., & Vermeulen, P.A.M., "Determinants of Product Innovation in Small Firms: A Cross-Industry Comparison." International Small Business Journal, N 24(6) ), 2001, P Niosi J, Towards agile innovation technology alliances in Canadian industry, Montreal, University of Montreal Presses, 1995, P Baldwin, J, Hanel, P , & Sabourin, O, Determinants of innovation activities in Canadian manufacturing firms: The role of intellectual property rights,' Analytical Studies Branch Research Paper Series. Statistics Canada, N 122, 2009, P Hamdani D., Innovation in Engineering Services, Statistics Canada, Service Industries Branch, N 30, 2000, P Vinding, A.L., Absorption Capacity and Innovation Performance: A Human Capital Approach, Economics of Innovation and Emerging Technology, N 15, 2006, p

148Chapter 2: Overview of determinants and key factors driving innovation b. Customers and suppliers Various studies have shown that customers can also be sources of innovation as long as they enable the generation of ideas. In fact, it seems that customers are the decisive source of innovation in most product innovation projects. The reason to explain customers' interest in driving innovation in SMEs is quite simple: a problem raised by a customer triggers the need for innovation, as innovations in SMEs can more easily follow a path, unlike many large companies. free development, the beginning It is not necessarily about the level of activity in an R&D department to be successful on the market and to perform better later on. It also seems that interaction with the suppliers makes it possible to increase the company's performance 425. These suppliers can be the source of various new innovative ideas and the nature of the relationship with them plays a role in explaining the success or failure. implementation of an innovation. Supplier ideas may be more focused on manufacturing processes 426. c. Technological opportunities The concept of technological opportunities is not new. The article by Baldwin, Hanel and Sabourin indicates that this concept dates back at least to Scherer (1965). This concept measures the importance that a company attaches to scientific research 427. It is an indication of the degree of knowledge circulation from one company to another. It indicates the extent to which knowledge can be transferred. In the service sector, it is often mentioned that in the structure of the company it is less common than in the manufacturing industry for a department to be exclusively involved in research and development 428. Whether it is relatively intuitive to see the connection between the technological possibilities and the degree of innovation is this relationship is probably less obvious, depending on the form of the innovation. Pavitt rated this link. As expected, he found that product innovations are positively correlated with technological capabilities, but also that economies of scale and thus company size favored process innovations 429. d. Competitive pressure The role of competition for innovative capacity has also been thoroughly investigated in the literature. From this point of view, Aghion et al. argued for the existence of a U-shaped relationship 424 Root-Bernstein R., Problem generation and innovation, in L.V. Shavinina (director), The International Handbook on Innovation, Oxford, Elsevier Science Lt√©e, 2003, P Maillat D., Ouevit M. and Senn L., "Innovation network and innovation ambientes: a bet for regional development", GREMI /EDES , Neuch√Ętel Switzerland, Tidd J., Bessant J. and Pavitt K., "Managing innovation: integrating technological, market and organizational change", 2nd edition, Chichester, Eng., John Wiley, 2001, P Baldwin, J., Hanel, P ., & Sabourin, O. "Determinants of innovation activities in Canadian manufacturing firms: The role of intellectual property rights", Institute for Analytical Studies. research articles. Statistics Canada, N 122, 2000, P Suddaby R, What Grounded Theory is not, Academy of Management Journal, N 49(4), 2006, P Pavitt, K, Sectoral patterns of technological change: towards a taxonomy and a theory‚ÄĚ. Research Policy, No. 13(6), 1984, p

149Chapter 2: Overview of determinants and key factors driving the reverse innovation between competition and innovation. They are based on companies in the industrial sector and show that innovation intensifies as competition increases until it reaches a critical threshold where competition becomes too intense to promote the development of innovations 430. This literature recognizes some refinements in the case with service companies. In the literature, competition is usually associated with international openness. The latter, however, offers companies more sources of knowledge with which they can strengthen their competitive advantage and thus develop innovations. Internal and external collaboration Internal collaboration According to the literature, the fact that a company acts in an integrated manner has a great influence on its ability to innovate. All in all, integration does not only mean cooperation between the various departments in the company, but also with external actors such as customers and suppliers. The integration, whether it is functional, external or factory-related, aims to provide greater flexibility and efficiency, better collection and dissemination of information as well as collaboration and interactive communication between different units in the company. Authors Parthasarty and Hammond argue that integration strengthens unity by enabling interactive communication and operations between different units of the 431 company. For Gatignon and Xuereb (1997, cited by Lukas and Ferrell: Functional integration increases communication between all organizational functions affected by customers and competitors, allowing them to be closer to the latest market trends 432. Damanpour, on the other hand, argues that integration through Promoting trust and interdependence between the different functional units of the organization helps to create a more favorable environment for the development of new products 433 , According to the study conducted by Lukas and Ferrell, who found the correlation between cross-functional coordination and the novelty of innovations of 194 US Parthasarty and Hammond, in turn, emphasized the connection between integration and innovation by analyzing the degree of integration of organizational mechanisms, especially functional coordination (functional integration), the use of units (production plant integration) and external collaboration (external integration). ), linked to innovation input and output. The analyzed sample consists of 45 companies that manufacture medical and surgical instruments and employ between 250 and 500 people. The results show that functional integration increases the frequency of new product developments and that this effect is even greater when the intensity of research and development is taken into account. External integration also significantly affects the frequency of innovation, but unlike 430 Darchen S. and Tremblay D.G, "Innovative Environments and the Creative Class: Review of the Writings and Analysis of Their Application in Urban Settings," the president of the Canadian Research Institute Socio-organizational issues in the knowledge economy, N, Parthasarthy, R., and Hammond, J., Inputs and outputs for product innovation: moderating effects of the innovation process. Journal of Engineering and Technology Management, N 19, 2002, P Lukas, BA and Ferrell, OC The Effect of Market Orientation on Product Innovation, Academy of Marketing Science Journal, N 28(2), 2000, P Damanpour, F., Innovation and Organization, Organizational Science, N 13, 2002, p

150Chapter 2: Overview of determinants and key factors driving the functional integration of innovations. This ratio becomes negligible when looking at the intensity of research and development. This suggests that the innovation rate increases when external integration is strong and R&D intensity is low. However, there is no relationship between unit integration and innovation, which may be related to the type of industry considered 434. Another study conducted by Nielsen and Lundvall as part of a study of four organizational practices, including organizational integration, human development dimensions, external collaboration and reward systems for 2000 Danish companies showed that each of these factors has a significant influence on the emergence of innovation 435. In addition, the influence of the organizational integration factor on the level of innovation was greater, as the probability that companies are innovative is close to to 435. twice as high compared to the other factors that increase the likelihood of innovation, but to a moderate extent. It suggests that companies that work in an integrated manner are more innovative than companies that do not have an integrated organizational structure. Most of the research shows that the most integrated companies are better able to deal with the uncertainty associated with innovation, which is why innovation exists. Therefore, each of the retained organizational practices has a significant impact on innovation. However, these practices appear to have a greater impact on innovation when a range of practices are used, and will also have a greater impact in knowledge-intensive industries and in industries where innovation is widespread than in industries where innovation occurs more slowly . In this sense, we can assume that the organizational structure, if it is open, flexible, participative and collaborative, increases the innovative capacity of SMEs. B. Network and partnership In the new knowledge economy, a company cannot exist in a vacuum. In order to maintain, expand or improve their innovative capacity, companies today need to establish various relationships with external partners such as competitive or non-competitive companies, institutions, universities, customers, suppliers, etc. Various studies (Landry and Amara, 2002; Becheikh et al., 2006b; Freel, 2000; Freel and Harrison, 2006) show that belonging to networks significantly improves firms' ability to innovate. In the specific case of resource-constrained SMEs, these collaborative networks are of great importance as they enable them to fill the lack of resources, skills and knowledge (Rothwell, 1991; Becheikh et al., 2006). Freel, 2000, compared the willingness of 238 innovative and non-innovative firms to collaborate and found that the most innovative firms collaborated more often with universities and other firms than non-innovators. Similarly, in a study of the influence of information sources on the novelty of innovations, Landry and Amara showed that there are partnerships between companies and government research centers and universities. 434 Parthasarthy, R. and Hammond, J. Product innovation inputs and outputs: moderating effects of the innovation process, Journal of Engineering and Technology Management, N 19, 2002, P Nielson Nielsen, P., and Lundvall, B.-A. Innovation, Learning Organizations and Industrial Relations, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies, DRUID Working Papers numbered, 2008, p.

151Chapter 2: Overview of Determinants and Key Factors Driving the Development of Radical Innovations 436. Le Bas, Picard and Suchecki argue that the technological and/or scientific conditions established during the earth's interaction with its environment are a decisive element not only for to represent the implementation of the innovation process, but also for its success. small , must develop cooperation strategies and call on a network of external partners 438. As Munier points out, innovation in a knowledge economy is no longer defined as a linear process, but rather as an interactive process between the company and its surroundings. In this connection, the company must acquire more competencies, especially aimed at maintaining relationships with third parties, acquiring external knowledge and increasing its innovative capacity 439. Becheikh et al. have shown that research networks and close collaboration with customers and suppliers outside the region where the company is located have a significant impact on the novelty of innovations 440. Such a network will often generate new ideas that are used to implement innovations, can be associated with a higher degree of novelty. Recently, Freel and Harrison, in a survey of 1,347 small manufacturing and service firms in Scotland and the North of England, examined the importance of small firms building innovation networks and the unique contribution of such networks to the successful introduction of new products and processes. Analysis of the results shows that 41.6% of companies that developed major innovations had a collaborative relationship with their customers, compared to 26.8% of companies that developed incremental innovations and 22% of non-innovative companies. 441. In addition, service companies cooperate less with external actors than production companies. Concretely, this research shows that there are positive correlations between success with product innovations and collaboration with customers and public institutions on the one hand, and between success with processes and collaboration with suppliers and universities on the other. But in order to reap the benefits of cooperation with the external environment, the company must be able to combine external knowledge with its own technological and human capital. The ability to develop external collaborations depends on its absorptive capacity, which in turn depends on the ability of human capital to integrate external developments. Business absorption refers to the organization's ability to identify, assimilate and use information obtained from the environment. Landry, R. and Amara, N., Effects of information sources on the novelty of innovations by Canadian manufacturers, Evidence from 1999 Statistics, Canada Innovation Survey: Survey prepared for Industry Canada, Innovation Policy Branch, Le Bas, C., Picard, F. and Suchecki, B. Individuals‚ÄĚ, Revue d'economie Politique, 108(5), 1998, P Perez, R., Brabet, J. and Yami, S. ‚ÄúManagement of Competitiveness and Employment‚ÄĚ, Paris: L ' Harmattan, 2000, P Munier, F., "Firm size and relational skills for innovation: an empirical check based on individual data from French industrial companies", Revue Internationale PME, N 14(1), 2001, P Becheikh et al, Opcit , P Freel, M.S. and Harrison, R.T., Innovation and Cooperation in the Small Firm Sector: Evidence from Northern Britain, Regional Studies, N 40(4), 2006, P Huet, F., "The Self-Reinforcing Effects of Collaboration and Innovation Skills: A Study on French SMEs‚ÄĚ, Revue Internationale PME, N 19(1), 2006, P

152Chapter 2: Overview of determinants and key factors driving innovation. Another study conducted by Tsai with two large multinational companies showed that cooperation between companies in the field of innovation not only increased the speed of innovation, but also significantly increased absorptive capacity, which has a positive impact on innovation and business performance 443. shows the role of absorptive capacity in development of collaborations for innovation in a sample of 638 French companies with 10 to 500 employees in four different industrial and service sectors of different intensity Technology. This research shows that companies with responsiveness are significantly more involved in collaboration than companies without responsiveness. The absorptive capacity would also facilitate external learning by strengthening both technological and organizational innovation capacity. The results also show the existence of a self-reinforcing dynamic in the innovative capacity of SMEs, as the author noted that companies that initially had learning capacity seemed to be able to activate and benefit from a cooperative to expand these developing skills, while companies lacking these capabilities have been less able to develop collaborative strategies to overcome this deficiency. Despite the benefits of collaborative networks for SMEs, the literature shows that they are not particularly inclined to collaborate444. Another study by Munier analyzed the relationship between size and relational innovation capacity in 3715 French companies with more than 20 employees. Possession of interpersonal skills for innovation was examined using three size classes: from 20 to 99 employees, from 100 to 499 employees and from 500 employees and more. The results of the survey show that SMEs, especially small companies with fewer than 100 employees, have little competence to collaborate with public research institutions. In addition, the relationship between skill and size class is more radical, especially in terms of involvement in corporate collaboration and other strategic alliances. Companies belong to networks that are not only different in nature, but also subject to different rules and procedures for operation and use. These networks, consisting of customers, suppliers, competitors, etc., are likely to provide the company with ideas and information about new technologies or future products. They provide access to different knowledge. These are translated into innovation. For Amidon.M, the best way to stimulate innovation is to transform a multifunctional value chain into a strategic network, where the parties are sources of knowledge, dissemination or implementation445. This structure becomes a learning network when all the actors who do this participate, contribute to the innovation process to take advantage of market opportunities 446. The learning takes place increasingly within networks. The production of distributed knowledge across innovation networks leads to the emergence of systems that include several interconnected products and services. This leads us to talk about clusters (or clusters), which have a greater meaning. Knowledge Transfer in Intra-Organizational Networks: Effects of Network Position and Absorptive Capacity on Business Unit Innovation and Performance, Academy of Management Journal, N 44, 2001, P Huet F, Opcit, P Meunier Alain, "SME, success strategy", Dunod edition, 2008, P Amidon Dehba.M, "Innovation and Knowledge Management", Organizational Edition, 2001, P03 149

153Chapter 2: Overview of determinants and key factors driving innovation beyond the network as they relate to all forms of exchange and knowledge sharing. They can be defined as: "Network of interdependent companies, knowledge-producing institutions (universities, research institutes, technology suppliers) and customers connected in a value-creating production chain"447. They are considered subsystems of the economy and vary from country to country or region to region. Depending on the activity (ICT, food) or geographical location (local, national, global), different types of clusters can be distinguished. The different networks with which companies are connected are: 448 - The institutional network: This is the set of formal or informal relationships that companies establish with institutional actors (state, local authorities, agencies, etc.). - The professional network: it concerns all formal or informal relationships that companies enter into with professional and/or consular organizations and their direct operators. It can take two main forms449: the spontaneous, informal network between professionals and the formal network. - The social network: refers to the formal or informal relationships that both companies and entrepreneurs enter into in relation to their economic, social and cultural environment. The benefit of this type of network is to keep the information exchange systems around companies (accountants, clients) and entrepreneurs (friends, alumni association) updated. We can distinguish between different types of partnerships: 1- Partners between companies: we start by characterizing the main types of R&D partnerships and then the advantages and limitations of partnerships: The main types of partnerships: according to Yves Doz and Gary Hamel, we distinguish three Types Number of Alliances 450: - Co-opting Alliances: These are about reaching a certain critical mass in certain markets, especially when it comes to industry standards. Although they have a high technological content, these alliances are more downstream: It is primarily about making good use of the developed technologies. - Co-Specialization Alliances: This is the search for a partner with complementary skills. The latter can be of different nature (e.g. knowledge of a market), but the ones that interest us here are technological skills. - Alliances for the acquisition of know-how: this type of partnership aims to find a partner who has competences that we do not have, but the objective C et Trouve.P, "PME et innovation", Ladocumentation française , Paris, 2004, P Dumont Régit, Network and partnership in social and medical-social work, Communication on the occasion of the 60th anniversary of ARSEA, Pas de Calais, France, Hamel G, Prahalad CK., The Core Competence of the Corporation , Harvard Business Review N 70(3 ), 2000, p

154Chapter 2: Overview of the determinants and key factors that stimulate innovation to acquire it and then become independent in the relevant field. The reasons that can lead two companies to join forces can also be more prosaic: the joint development of a product makes it possible to share the associated costs (R&D and sometimes also industrialization). If business seems too limited to cover the initial investment, it may be safer to limit your efforts this way. So far we have talked about cooperation between companies that are on the same level as an industry (competitors or producers of additional products). We generally reserve the term "alliance" for situations like this. But partnerships can also arise between a customer and a supplier. We are talking about co-development or co-design partnerships. Gille Garel distinguishes co-development from traditional subcontracting based on five characteristics451: - Early selection of the supplier based on strategic criteria for cooperation during the development project - A wider field of action for the supplier - The supplier undertakes responsibility for the overall result (measured on the basis of the triptych of quality, cost, time) - close, continuous and transparent communication - integration of technical and economic logic (in traditional subcontracting relationships technical aspects are determined first and suppliers offer on this basis, in consultation -design it is the improvement of the economic performance part of the development process). Technological partnerships are not only about joint development of technologies or products. Partners can suggest resources of different types. a) Advantages and limitations of R&D partnerships: The advantages of partnerships depend on the objectives associated with the different types of alliances presented in the previous section. The table below summarizes these and also lists the risks of these different forms of collaboration. However, note that the benefits are also felt more globally. A company that successfully manages multiple partnerships will gradually build a reputation as a reliable and interesting partner and will be better able to enter into new alliances on good terms. Furthermore, such an alliance ensures regular exchange with engineers and scientists from other companies in the same or related fields. However, it is very important for an R&D department to stay at the forefront of research and establish connections with the outside world. Some strategists have even made the ability to form relationships with other organizations one of the fundamental skills of companies that are likely to give them a competitive advantage. Garel.G, "Le management de projet", La Découverte Edition, 2003, P Dyer .JH & Singh.H, "The Relational View: Cooperative Strategy and Sources of Intra-Organizational Competitive Advantage", Academy of Management Review, Vol. 23, N4, 1998, p

155Chapter 2: Overview of determinants and key factors driving innovation. Co-specialization alliances. Alliances to gain knowledge. Alliances to reduce development costs. Partnerships between customer and supplier. Table no. 7: Advantages and limitations of alliances. Advantages - Possibility of integrated product development without mastered technologies - Possibility of learning in relation to integration, but also methodically - The confrontation of different logics can lead to more creativity - Possibility of acquiring competences that complement one's own, opening new markets - Same potential effect on creativity as co-specialization Alliances - Sharing of costs and thus risks - Opportunities for learning across methods - Sharing of development costs, previously concentrated at the customer - Multiplication of innovation opportunities - Increased security for the supplier (long-term contracts) Risks - Mutually dependence, problematic when the partner merges with another company for the next generation of the product - Risk of "culture shock" increased by specialization in different areas - Loss of knowledge exclusivity - Sometimes it is difficult to balance the partners find contribution - Facts Die The fact, that the alliance is generally formed between two direct competitors can lead to minimal involvement (fear of letting the competitor take advantage of their know-how), which can lead to project failure. -Risk of greater dependence on its suppliers -Opportunity for the latter to reuse part of the know-how that the competitors have built up. -Complexity of integration issues that may favor modularity over integrity. Source: Corbel Pascal, "Technology, Innovation, Strategy," Gualino Lextenso edition, 2009, p. 135. Alliances can bring together companies of the same size, as well as a large company and a small company. Allianz then plays a much more important role (in terms of potential and risk) for medium-sized companies than for large companies. Current trends in innovation, sometimes referred to as "intensive innovation"453, make it difficult to implement partnerships: the goals to be achieved are not clearly defined and the importance of a project for the key actors is even more difficult to assess. priority. Indeed, these latter elements will evolve significantly as new avenues emerge that add value directly (new products, new processes) or more indirectly (new knowledge that can be applied to other projects). 453 Masson P, Weil B and Hatchuel A, The Innovation Process, Lavoisier, Paris, 2006, S07 152

156Chapter 2: Overview of determinants and key factors driving innovation. Following these new impulses can also significantly change the resources allocated to the project and lead to the integration of new partners, which inevitably leads to a change in the initial balances. The most spectacular manifestation of the limitations of this type of partnership is the emergence of conflict. Marc Frechet clearly describes how innovation partnerships bring together a number of factors that can increase the risk of their occurrence: "According to the hypothesis, the partners start a project whose success is uncertain and whose future contingencies are very vague". of innovators in their project, the highly strategic nature of the assets involved and the issues surrounding the definition of future worlds make them particularly susceptible to the manifestation of extreme emotions and violent disagreements. b) Partnerships with a research institution: Companies are of course not obliged to limit their partnership to their collaborators. They may also be interested in developing collaborations with research organizations and universities. The contracts mainly relate to upstream research work. There are three main forms of cooperation between research laboratories and companies 455: - Research contracts: The laboratory then carries out a scientific service activity for the contracting company. This type of contract is more like an R&D outsourcing perspective. But on the basis of this type of contract, more permanent relationships are often formed. If the projects are sufficiently long and ambitious, it can also lead to the company hiring a graduate student from the laboratory. - The joint effort in the programs: Public funding is increasingly dependent on the implementation of programs involving several companies and laboratories. - Establishment of a business by the research laboratory: this usually remains closely linked to the original laboratory. It has been shown that the relations between research institutions and companies can create a very positive dynamic. The example of Silicon Valley is often cited as a symbol of the potential of forming a technology cluster that brings together large universities, large companies, a dense network of small and medium-sized enterprises and especially high-tech start-ups and support partners. (corporate lawyers, venture capitalists, consultants). The basics are clear. In addition to funding these projects (which often allow for reimbursement to PhD students), research labs can greatly benefit from these collaborations: ideas for problems, access to equipment, placement of PhD students in companies - the potential benefits are indeed many and the satisfaction of seeing how the work of its researchers translates into concrete innovations. 454 Chanal V, Lesca H, Martinet AC., Towards an Engineering or Research in Management Sciences. Revue Française de Gestion, 2007, P Fernez-Walch.S and Romon.F "Innovation Management", Vuibert Edition, 2006, P Corbel.P 2009, Op Cit, p.

157Chapter 2: Overview of determinants and key factors driving innovation. Technological alliances between SMEs make it possible to reach the different stages of innovation development (technological innovation). The latter depends on the relationships between the companies and can only be done in collaboration with several organisations. several other organizations at different stages of innovation development, the last of which depends on these relationships 458. Technology alliances enable economies of scale in research and development, reduce risk and uncertainty and shorten product life cycles, the introduction of other complementary assets, the search for standards and the acquisition of regional "externalities " 459. Direct cooperation between two independent companies is sometimes required, for example between a customer and a supplier, to reduce uncertainty in the innovation process where complex and specialized equipment has been developed and linked to a sale to customers. Perhaps for this reason, Tether notes that cooperative relationships increase with the degree of radicality in the source of innovation and export. Source of Information To survive and thrive in an increasingly uncertain economic environment, it is important to obtain information to anticipate market needs. The shortening of the life cycle of technologies and the rapid development of markets and competition give an advantage to companies that master information flows and quickly integrate them into their innovation process. After all, innovation is a complex and uncertain process that requires a global view of the environment, identifying new products from competitors and the best partners and following market developments 461. This entails a great need for comprehensive and up-to-date information. In this context, information appears as a catalyst for innovation. So we can assume that a company's success in innovation depends on its ability to explore, acquire, process and disseminate information within its organization. This information can come from various internal and external sources of the company, such as suppliers, customers, research centers, universities, competitors, magazines, fairs, etc. It can also take different forms: scientific, technical, technological information, competitive information, new products, exports, etc. 457 Norrin H & Etienne St-J, "Innovation in SMEs," Note to the 5th International Congress of the Entrepreneurship Academy, Sherbrooke, 3-5. October 2007, p 13, available locally: Com 458 Duval I et Duffal N, "Business Economics, SME strategy", Harmattan Edition, 2005, P Ater Louati R and Hassairi AF, "The Strategic Determinants of the success of Investments in Information and Communication Technologies", XVI. Conference International de Management Stratégique, Montreal, 6-7. June Tether B.S., Who Cooperates for Innovation, and Why: An Empirical Analysis, Research Policy, N 31, 2002, P Website visited at

158Chapter 2: Overview of determinants and key factors driving innovation. This requires the establishment of a supervisory system to support managers' strategic decision-making process by enabling them to turn threats into opportunities 462. For him, Chaput confirms in part that the survival and growth of companies depends on their ability to obtain information from their business. environment 463. In other words, it is about establishing a dynamic strategic surveillance that includes several specialized surveillance systems, especially of a technological, competitive, commercial or marketing and environmental nature. Chaput notes that technology monitoring allows the company to identify new and relevant technologies as early as possible that are likely to be critical to its future development. Competitive Intelligence makes it possible to better monitor the strategies of potential or current competitors, while Commercial or Marketing Intelligence provides relevant information about customers, markets and suppliers. Environmental monitoring, in turn, will allow the company to gain a strategic advantage by deciphering external signals. Strategic monitoring therefore depends on the organization's ability to dynamically manage all these types of monitoring. Julien, for his part, believes that global innovations, especially for SMEs, require comprehensive information about markets, competitors and technologies, which they then have to manage 464. Based on this permanent analysis, they can launch innovation projects through internal development in line with environmental concerns . data and reduction of risk factors associated with innovation. St-Pierre and Mathieu argue that searching for rich information, relevant resources and wide dissemination of information within the company are seen as activities that can promote a creative climate and a necessary flexible organization. implementation of innovation 465. Regarding the relationship between monitoring activities and innovation in SMEs, a study was carried out by St. Pierre and Mathieu, where they emphasized this correlation and pointed out that the highly innovative companies have more mature business intelligence activities than the others, and these companies are more likely to use automated information exchange systems, especially intranet, internet/extranet 466. From a innovation perspective, Chalus-Sauvannet investigated the impact of integrating intelligence into the organizational system of a case study company. The investigated company comes from the agri-food sector, is a leader in the French bakery market and really wants to grow by reintroducing its innovations. The author's goal was to examine the integration of monitoring at the heart of the organization and to measure the expected effect of the company, which is the implementation of innovation through development. internal This study showed that activation of a sleep device 462 Audet, J. (2003). Business intelligence in high-tech SMEs: a case study based on cross-site comparisons. Revue Internationale PME, 16(2)-A (2000). Fast growing SMEs: explanatory factors. Investigaciones Europeas de Oirección y Economia de la Empresa, 6(2), P St-Pierre et Mathieu, Opcit, P St Pierre et Mathieu, Ibid, P

159Chapter 2: Overview of Determinants and Key Factors Driving Innovation appears to be related to the innovation drive of the company under study, as this company has continued to launch new products relatively regularly during the two years of intervention due to a frequency of two innovations per year 467 Despite its importance for innovation, the process of strategic monitoring in SMEs does not exist in a formalized form. SMEs, often led by the entrepreneur or a very limited number of people, focus more on their internal conditions than on their external environment. Their efforts are more focused on improving organizational efficiency than on analyzing the sweeping changes around them, making their strategies relatively naive. SMEs would make them more aware of the added value and possibilities of innovation and increase the innovation success of SMEs 470. The source of information is thus an important aspect of the innovation process. It is the sources of information that determine the context in which the company operates. This context in turn defines the network through which contacts and information synergies are created. A good information network characterizes a good national innovation system. The basis for innovation. Economic actors are internal and external actors. B. Exports The intensity of a country's exports is considered by many to be an important indicator of vitality and competitiveness because it enables the creation of wealth. Is exporting efficient because firms make more use of new technologies or innovations, or is it rather the fact that they export and operate in a different environment and under different circumstances that encourages firms to innovate more, adopt new technologies and even implement? new, more sophisticated business practices that better meet export needs? There is a clear causality problem in the relationship between export and innovation, which has been identified and commented on by several authors 473. Freel proposes a theoretical relationship between innovation, as it enables the development of unique and varied products, and companies' tendency to export. However, this relationship ignores the role 467 Chalus-Sauvannet, M.-C. The Journal of Management Sciences: Leadership and Management. Economic Intelligence and Innovation Strategy, N 41(218), 2006, PQ Regan.N and Ghobadian A., Strategy Planning: A Comparison of High and Low Technology Manufacturing Small Firms, Technovation, N 25 (10), 2005, P Bencheick et . al., Opcit, P. Chalus-Sauvannet, M.-C. Opcit, P. Lundvall BA, "Innovation as an interactive process", in G. Dosi, C. Freeman, R. Nelson et al., Technical Change and Economic Theory, London, Pinter Publishers Ltd, 1992, P St Pierre Josée & Mathieu Claude, "Product Innovation in Manufacturing SMEs: Organisation, Success Factor and Performance", Research report submitted to the Ministry of Finance, Economics and Research, March 2003, POSEO. (2006). SMEs and technological innovation: for a more natural relationship. Perspectives on SMEs n010, Observatory for SMEs, OSEO Services. 156

160Chapter 2: Overview of determinants and key factors driving entrepreneurial innovation and the size of the domestic market, which may be sufficient to enable firms to achieve significant growth without assuming the risks of international operations. However, his statistical results do not support his hypotheses474. In a meta-analysis, Zou and Stan instead highlight a significant correlation between organizational and export performance and the adaptation of firm products to customer needs. This situation can be explained by the fact that the exporting company was able to handle a greater part of the uncertainty by selling the products it knows and can produce abroad. This conclusion would then lead us to see a stronger correlation between product modification activities and exports than between new product development activities and exports. Looking at the characteristics of companies that export more regularly and in larger quantities, as well as companies that export on a more ad hoc basis, shows that companies with a strong export orientation place more emphasis on developing new products in the market. a continuous basis and improvement of existing production methods 476. For Julien, it is necessary to meet at least two necessary conditions for export success: a solid national base market and supply of relatively original and innovative products. 477. De Toni and Nassimbeni, on the other hand, add that the complexity of the international activities of SMEs requires a well-developed organizational structure, that they apply advanced management practices and that their production system is relatively sophisticated to respond adequately to the particularities of their environment. . Demand from importers 478. Nassimbeni confirms the importance of innovation by demonstrating that the propensity of SMEs to export is related to their ability to offer innovative products and establish fruitful collaborations with partners in their environment, while the technological profile in contrast to what many authors claim, does not play a significant role. To serve their customers abroad, exporting companies use production strategies that are more linked to the product (product design system, supported drawings, etc.) than to the processes (flexible workplaces, programmable logic controllers, numerically controlled machines, etc.). ). 479. Roper and Love show that in British and German installations the likelihood of exporting is positively related to product innovation. On the British side, there is also a positive relationship between innovation and export intensity, while in Germany it is the other way around, where the negative relationship is explained by the fact that the needs in this country, which is undergoing major structural restructuring, are great. . market opportunities for innovative companies. The latter result can be used to justify that more SMEs with export potential do not do so because their national market offers sufficient growth opportunities to meet certain entrepreneurs' goals. But exports would not then be 474 Freel, M. S., & Harrison, R. T., Innovation and Cooperation in the Small Firm Sector: Evidence from Northern Britain. Regional Studies, 40(4), 2006, P Zou S. and Stan.S, "The determinants of export performance: a review of the empirical literature between , International Marketing Review, N 15-5, 1998, P Schilling, M. , & Thérin, F., Management of technological innovation", Maxima Edition, Paris, 2006, P Julien P.A., Opcit, P De Toni A. and Nassimbeni G., "The export propensity of small firms: a comparison of organizational and operational meaning ."Management Levers in Exporting and Non-Exporting Units", International Journal of Entrepreneurship Behavior & Research, N 7-4, 2001, P Nassimbeni, Opcit, P

161Chapter 2: Overview of Determinants and Key Factors Driving Business Innovation 480. St-Pierre, for his part, has shown, without proving causation, that Canadian exporters are more involved in R&D activities and collaborations. Firms that manufacture a greater proportion of their own products are less productive but more efficient than their local market-oriented counterparts. These results depend on the destination of the export, near (US) or far (overseas). On the other hand, it seems that the strategy developed by the company to sell its products abroad is a more important predictor of export organization and performance than innovation.481 Conclusion: Finally, we must not forget that an In is based on knowledge economy Innovation no longer according to a linear model, but according to an interactive model. Its development depends not only on the company's decisions and management practices, but also on an appropriate institutional environment that provides it with the resources and protection it needs. The environment is still closely linked to innovations and seems to be an active supporter of their development. In this chapter we have highlighted the determinants of innovation. However, determinants of innovation can be divided into different categories and cannot be reduced to the function of the company's R&D. The development of innovations requires the mobilization of various internal and external factors for the company. Furthermore, in order to understand how the innovation process is built successfully, it was necessary to mention three categories of determinants, namely the organizational determinants of innovation, the institutional determinants and the geographical determinants of innovation. The realization and success of innovations depends on the spread of different skills. In the second part, we presented the most important factors that drive innovation. We have established that the company can no longer realize innovation projects alone. Business endeavors must be supported by partnerships through business/business relationships or companies: university or other institution and their financial support. The space must also be adapted to the needs of companies, since the world of localization and agglomeration of companies largely determines the transfer of knowledge, thereby reducing the cost of innovation. Despite the persistent efforts of some researchers482, it is still a fact that it is still very difficult to understand the factors and causes of failure. The problem of success or failure is complex and there is no satisfactory general answer. Roper.S and Love J., Opcit, P.St. Pierre J. and Trépanier M., "Innovation, success guaranteed for SMEs", Le Nouvelliste, Thursday 15 March Liman O, "Success factors and causes of failure in a business", Ngaoundéré University, DEA in Management Science, 2002 , P Saporta B, "Enterprise Creation: Challenges and Perspectives", French Management Review, N 101, November-December 1994, p.

162Conclusion of the first part As recent studies confirm, at a time when managers recognize the importance of innovation, the majority of them are dissatisfied with the way innovation is managed in their organization. In fact, performance as a result of innovation varies considerably between the different sectors involved, but also between companies in the same sector. This indicates that both structural and organizational factors influence the impact of innovation on performance. Management research confirms that innovative companies; Those that can leverage innovations to improve their production processes or differentiate their products and services outperform their peers in terms of market share, increased profitability or market value. Innovation is now establishing itself as the opportunity to organize the innovation process correctly in the company and achieve a sustainable competitive advantage. This practice of innovation makes it possible not only to make any project a success, but also to define the company's innovation axes, generate innovative ideas, create the technological and marketing resources that serve to select project priorities and monitor implementation. On the other hand, innovation is inherently a difficult, complex and risky art: most new technologies cannot be translated into products or services, and in general new products and services do not lead to commercial success. In short, at the end of the first chapter, we can say that the study of innovation involves different disciplines (management, sociology, economics, geography, etc.) and that innovation activities are complex due to the fact that they depend on internal and company external conditions. After different definitions and institutional and geographical dimensions of innovation are given. We have paid particular attention to the key factors that drive innovation in small and medium-sized enterprises. Despite the importance of the literature on innovation, the latter is still difficult to understand, and its implementation in the company is even more complicated, since the determinants of innovation are not only limited to the internal responsibility of the company, but also to the internal responsibility. By the company. also depends on external factors (institutional and geographical). It is also important to emphasize that innovation is not easily embedded in company culture, as it often encounters several cultural and behavioral barriers. At the end of the second chapter, we understand that the realization of innovations depends on several parameters whose complementarity and synergy are inevitable. 159

163Part II: Empirical study of determinants of innovation in Algerian SMEs. Chapter 3: Algerian SMEs and innovation..161 Chapter 4: Application to Algerian SMEs..227

164Introduction to the second part: Algeria has had good economic results in recent years, which has led to a consolidation of the macroeconomic framework. However, the economy is highly dependent on the hydrocarbon sector and is therefore still very sensitive to external shocks. From 2004 to 2010, GDP grew by an average of 3.4%, driven by the performance of the hydrocarbon sector, but also by the contribution of the construction and public works (BTP) service sector and, to a lesser extent, agriculture. , which had an exceptional grain harvest in 2010. The dynamism in the service and construction sectors is largely the result of large public investments. The dynamism of activity in these sectors is reflected in the relatively high growth of GDP outside the hydrocarbon sector, which amounted to 6.3% per annum during this period. However, its still small contribution to GDP puts a real burden on the challenge of diversifying the country's sources of income. Several Algerian scholars agree that the problem of technological innovation in Algeria arose in the early years of independence, as part of economic development programs aimed at importing equipment and foreign technology. Algeria's economic independence would be guaranteed by using technology transfer combined with a national scientific base, but the lack of local capacity for dissemination and technical production created a "vicious technological circle" and prevented technological innovation from being mastered. Parallel to the period of industrialization of Algeria, resorting to the technology transfer model, governments released budgets for scientific research (since the 1970s) and created a number of institutions and organizations to serve as a framework for the development of research and innovation activities. It should be noted that the National Scientific Research System (SNRS) in Algeria has long been characterized by instability in its research structures, which has led to interesting reforms that have seriously hampered the valorization and transfer of research research. After several years of efforts towards the industrialization of Algeria, endogenous technological development and investments in scientific research, the capacity of Algerian companies to innovate remains weak. There have even been several reforms around public enterprise and the inauguration of investment freedom for private companies, recently laws promoting entrepreneurship and innovation have been passed and the research system has been reformed to meet the needs of industry. The innovative capacity of the Algerian company remained very weak. Nevertheless, we must emphasize that significant research and development efforts have been made in the past by some public industry groups such as SIDER, SONATRACH, SONELGAZ. This dynamic leads us in this section to ask questions about important elements in research into the innovative capacity of SMEs. In the third chapter we will 161

165Take stock of SMEs in Algeria by presenting the various statistics up to 2013. Next, we take a closer look at the various mechanisms used to promote and support innovation. Second, we focus on the Algerian SME's ability to innovate, followed by a SWOT analysis that explains the interviews and the innovation opportunities in the Algerian environment, as well as the strengths and weaknesses of the Algerian company. We know that for several years Algeria has invested heavily in developing Algerian companies' willingness to innovate. The fourth and final chapter returns to the main determinants that drive SMEs to innovate with an empirical study of an econometric nature, based on a sample of 118 SMEs at national level. 162

166Chapter 3: Algerian SMEs and innovation Section 1: Presentation of Algerian SMEs 161 I. Inventory of Algerian SMEs II III. Some statistics on SMEs in Algeria. The importance and role of SMEs for economic development.178 Section 2: State support mechanisms for SMEs I. Strategies and measures for the development of SMEs in Algeria.180 II.III. Incentives for the creation and development of SMEs..183 Research and innovation policy in Algeria 185 Part 3: Innovation in Algerian SMEs..192 I. The main support measures for innovation in Algeria.195 II. The public enterprise: innovation or second priority ? III. Private companies face the challenge of innovation...218 Barriers to innovation in Algeria...221

167Chapter 3: Algerian SMEs and innovation Introduction Today, the phenomenon of SMEs arouses great interest from countries and governments, but also from researchers. It is increasingly asserting its presence in the economic structure and playing an important role in the development and growth of a region or a country. SMEs remain a vague term whose definitions vary and have characteristics that contrast with those of large companies. SME managers are aware of the importance of innovation for their business. "The company must continue to develop its competences in order to be in a constant innovation process and be one step ahead of the market and competitors rather than being left behind. It must learn to question its way of designing, developing, producing, launching and selling new products while managing the daily operations of the SME, then its characteristics, its strengths and weaknesses and then the variables that drive innovation in lift . SMEs. Section 1: Presentation of Algerian SMEs I. Inventory of Algerian SMEs Algeria's economic orientation since independence led to a marginalization of SMEs in favor of large companies, which corresponded to the then model of industrialized industries. In addition, the state only began to take an interest in small and medium-sized enterprises with the economic reforms that began in the 1980s. Algeria underwent a radical change in its economic environment caused by the transition from a command economy to a market economy. The country's resolute commitment to the market economy releases entrepreneurial energy and generates some economic dynamism, leading to a boom in private SMEs. In this section, we focus our interest in understanding the phenomenon of SMEs in Algeria. Rise of SMEs: growing interest in Algeria. In Algeria, the development strategy in the 1970s was based on hydrocarbon development and investment. concentrated in large units in the industrial poles. "It has long been about the biggest company, the biggest university, the biggest farm..." 485. Public investment in small industries takes place only in a few dozen units, targeting the most obvious regional differences in the context of ... Special Development Programs 486. In the initial evaluation of the planning attempt in 1979, these large industrial facilities provided information on areas of economies of scale. After the failure of this industrial strategy, the Algerian state carried out an organic restructuring of the companies in 1980, focusing mainly on size. We have 484 Duval I and Duffal N, "Business Economics, the strategy of SMEs", published by Hrmattan, 2005, P. Guilhon Bernard, Development strategies based on the knowledge economy: opportunities and contradictions, review which development strategies for the Maghreb countries , PS2D , Perspective strategy and sustainable development, Tunisia 2011, N 12, S. Abderrahmane Abdou, Bouyakoub A, Michel L and Mohamed M, "Entrepreneurs and SMEs, Algerian-French approach", edition l Harmattan, 2004, pp. 75-164

168In Chapter IV: Application to Algerian SMEs, a new sector emerged, namely local public enterprises (small and medium-sized enterprises) managed by wilayas and municipalities, comprising 1800 units in the Algerian economy as of 1989, which is gradually being transformed into a market economy, to significant development of SMEs and the private sector. The adoption of the structural adjustment program since 1994 has made it possible to accelerate economic reforms, leading to increased liberalization of the economy. The implementation of these transformations seems to be very difficult, and this difficulty is not only related to the objective conditions of the economic crisis and the difficult adaptation of public enterprises to market mechanisms. The transition to a market economy took the form of the privatization of public enterprises and the promotion of entrepreneurship, which led to the emergence of a structure of small and medium-sized enterprises. 1.2 Definition and characteristics of the development of the institutional framework for Algerian SMEs With the failure of the industrial strategy in the 1970s, the Algerian state introduced various investment promotion mechanisms, creating a primary place for small and medium-sized enterprises. The latter has become a privileged tool for Algeria in the context of reforms aimed at initiating economic and social recovery. It goes without saying that SMEs are important for a country's growth, employment and welfare. All statistics from the vast majority of developed countries show that SMEs generate 70% of added value and create more than 60% of jobs. Algeria, like all European countries, has become aware of the need to develop this vital sector by taking a number of measures: institution building, regulatory changes and others. Defining SMEs is not an easy task as it varies from country to country depending on the chosen context and is closely related to a country's development policy. The European Union considers a company to be small when the entrepreneur is able to manage it alone, make the essential decisions and take personal responsibility for the results of his management488 and directly assume the economic, technical, social and moral responsibility to undertake the business , regardless of the legal form of delle ci 489. Decree N of December 12 on the guidance law for the promotion of small and medium-sized enterprises bases the definition of an SME on three criteria491: the number of employees, the turnover or annual balance and independence. Article 4 defines SME, regardless of its legal form, as "an enterprise that produces goods and/or services: with 1 to 250 employees, whose turnover does not exceed 2 billion dinars, or whose total assets do not exceed 500 million dinars, and it respects 487%." Khelfaoui H, "Science in Africa at the beginning of the 21st century: Science in Algeria, Part 3: Professions, Research Institute for Development (IRD France), European Commission, French Ministry of Foreign Affairs, 2001, p. 2. Available at Visité le Moez Ahmed, "The sources of finance for SMEs and the creation of the Tunisian alternative market", IHEC Carthage, 2007, P Abderahmane Abdou et al., Opcit, P Official Journal no. 77 of 15 December Poulain Edouard, " Emergence of a local public economy in Algeria", CREAD notebook N 2, 2nd quarter, 1984, p.

169Chapter IV: Application of the independence criteria to Algerian SMEs 492". Articles 5, 6 and 7 of the same law divide this company (SME) into three categories, summarized in the following table: Table N 8: Definition of SMEs in Algeria Personnel company turnover Annual balance sheet criteria Average 50 to 2 billion DA 100 to 500 million GK Small 10 to 49 Less than 200 million GK Less than 100 million GK Very small ZBOs 1 to 9 Less than 20 million GK Less than 10 million GK Source : Proceedings of the National SME Conference 2004, p. 32 A From the definitions cited above and the historical overview of the development of SMEs and some research articles such as (Bouyacoub 2003, Gillet 2003, Hamed 2003, Melbouci 2004 and the CNES report), we concludes that SMEs generally have the following characteristics493: Your small size They are newly created They tend to be concentrated in niches or gaps in the market left by the public sector, giving them comfortable monopolies. They are therefore profit-oriented and generate little innovation. They tend to be familial. Run 494 and slightly inclined to open capital to foreigners. Some of their activities are carried out informally (financing, production, marketing, delivery); Their market is primarily local and national, very rarely international. Cooperation between entrepreneurs and with governments is insufficiently developed. The growth techniques (transfer, fusion, etc.) are mastered or not used. Resources are often underutilized due to the lack of a business-friendly environment The centralization of management, The low specialization of management, a poorly formalized strategy and an internal and external information system that is not very complex and organized. In Algeria, as in other countries, the special nature of the company's small size is confirmed. In 2007, the micro-enterprise category accounted for 95.33% of the total SME population (i.e. enterprises out of 24,140). In Algerian small businesses, management is in the hands of the owner and manager. Personal relationships take precedence over bureaucratic relationships and 492 A company is independent when at least 25% of its share capital is outside the control of other companies that have direct or reciprocal ownership interests in it. 493 Abdellah Redouane, "SME Development and Export Promotion: What Prospects for Algeria, Case Study of the Wilaya of Bejaia", The family business is defined as: "an organization where two or more family members influence the direction of the business through the exercise of." Family ties, leadership positions or ownership of capital", Allouche José and Amann Bruno "The family business: a state of the art", S09. Available on the website: asso.nordnet.fr/adreg/allouche-amman3.pdf 166

170Chapter IV: Application to Algerian SMEs Recruitment very often takes place within the family circle. The special nature of the Algerian SME is undoubtedly still the company's family and traditional criterion. During the colonial period, Algeria had a French economy, governed from Algiers under constant pressure from the colonizer in 496. After independence, the Algerian economy to this day has a series of two different industrial models: the production model based on large public enterprises and the model based on small and medium-sized enterprises , primarily private companies. "The majority of Algerian SMEs were created after independence: they developed very slowly, without proper infrastructure, superstructure or historical experience." 497. In general, two major periods characterize the institutional, administrative and legal framework within which SMEs have developed since independence: the first, which lasted until 1982, was characterized by regulations aimed mainly at limiting private initiative, with the creation of a heavy industry which from 1982 to 2002 played the role of creating the necessary mechanisms to support SMEs within the framework of private initiative 498. The period: This period is politically characterized by a planned economy with a socialist character. Algeria has built a huge public sector in almost all areas and especially in manufacturing, which is considered heavy industry. Private companies, and therefore also small and medium-sized companies, were relatively marginalized and the private manufacturing industry had a family character, mostly artisanal, without large companies. 499. The first investment law was adopted in 1963 to put an end to the instability that followed independence, with the aim of reformulating the institutional framework of the country's production apparatus 500 . Due to the shortcomings of this code regarding its low impact on SME development, another code was published in 2011. This new investment code aimed to establish a status of national private investment in the context of economic development 501. According to the CNES- report from 2003, there was no clear policy for the private sector throughout the period. Private enterprise was restricted by strict state controls, requiring a permit for any investment. "After 20 years of dominance in the public sector in Algeria, under the motto of the industrialization of industry, 495 Tabet Aouel Wassila, "The middle class and its new environment, challenge and strategy", doctoral thesis in economics, University of Tlemcen 2005/ 2006, S . Atil Ahmed, "Environmental responsibility in Algerian SMEs: Towards a typological analysis of the challenges and obstacles to integration", Rennes, 2008, P2 497 National Economic and Social Council: For a development policy for SMEs in Algeria, Algiers. Laws of the national SME meeting, January (Report prepared by the Ministry of Small and Medium Enterprises and Crafts) 499 Isli MA, "Enterprise Creation in Algeria", CREAD Notebooks, N 73, 2005, P Sadi NA, "The privatization of public enterprises in Algeria, goals, methods and challenges", OPU, 2006, S. National Council, Opcit,

171Chapter IV: Application to Algerian SMEs. The state's sole owner and entrepreneur in 1982 assigned the private sector an additional role in certain activities with a very limited level of investment." 502. The period: In 1982, Law 82-11 on national private economic investment was issued. This text marks the beginning of the opening of ‚Äč‚Äčthe economic policy of private initiative, but indicates that the measures taken in this context have had only a limited impact on the expansion of the private sector.Follow-up to Decision N on the establishment of the Office for Guidance, Supervision and Coordination of Private investments (OSCIP) in 1983 503. "With the investment code of 1982 and the establishment of OSCIP, for the first time since its national development goals. However, it must be emphasized that these provisions had only a limited impact on the creation of new SMEs The unsatisfactory results of the economic and social development strategy have led the Algerian state to recognize the need to implement far-reaching economic reforms. In 1988, the law was passed to clarify methods of controlling private investment, followed in 1990 by another law (Law 90-10) on money and credit. This new orientation is based on freedom and equal treatment for all Algerian companies, both public and private. Domestic and foreign private operators established an Investment Promotion Support and Supervision Agency (APSI) in 1993-1993. In modern times, measures have been taken in favor of the withdrawal of the state from the functioning of the economy through the privatization of public enterprises, a measure that confirms the increasing importance of the private sector. Before the actual privatization, Algeria first resorted to the privatization of administrative forms, that is, H. on the administrative autonomy of the public company, which nevertheless remains state-owned Portfolio of capital shares held by the state in companies. A total of eight mutual funds, specialized by activity, were established and operated for six years until they were challenged in 1995 with the state's Commercial Capital Act 508, which created public holding companies. Instead of the equity funds and the Privatization Law 509. Eleven nationally focused public holding companies and five regionally focused holding companies have been established and legally enjoy the properties of real estate. They are formed on the basis of industrial sectors in which Algeria would have comparative advantages. 502 Assala Khalil, "SMEs in Algeria: For a Globalization Development Policy", 8th International Francophone Congress on Entrepreneurship and Small and Medium Enterprises, "The Internationalization of SMEs and its Implications for Entrepreneurial Strategies" October 25, 26, 27. H. Kendel, "Strategy for the agglomeration of scientific and technological companies in the sector of electricity, electronics and household appliances in Algeria", Paul C√©zanne University, Paris, March 2007, available in the National Council, Opcit 505 A.Kerzabi and Z .Kerzabi, "Institutions, innovations and Growth in Algeria", Symposium on Innovation for Competitiveness and Development: What Prospects for a Successful Startup in Algeria?, 16-19. April, Decree No. October 1993 to promote investments 507 Benotmane Salim "Diagnosis of an Algerian SME", Licensed Work, University of Annaba, MBA Finance Specialty, Decree of 25 September 1995 (Revised 2001) 509 Decree of 26 August 1995 (partially amended in 1997, then fully revised).

172Chapter IV: Application to Algerian SMEs The comparison between this organization of the state's commercial capital and the organization based on the previous equity funds reveals three main differences510: - The public company has much more autonomy than in the old organization: the sale is prohibited until now it is possible to acquire physical and financial assets. - In contrast to mutual funds, the holding company has all the characteristics of ownership and is legally the sole interlocutor for the limited company. - The portfolios of the holding companies are built on the basis of strategic objectives to promote development and not, as was the case with equity funds, on the basis of objectives that focus mainly on financial viability through mutual compensation between listed companies. Privatization of public companies in Algeria takes place in a variety of ways, from asset sales to private buyers, through employee takeovers and partnerships, to partial or full privatization. The overall results of privatization measures for all types show that 458 public enterprises were privatized. 511 The ongoing privatization efforts in the public sector are not without consequences for private companies. Isli states that "the privatization of public enterprises will have a direct impact on the promotion of private enterprises, especially with the possibility of resuming the activities thus privatized and new promoters entering the market, consisting of managers vacated by privatization or dissolution ." . of their listed companies‚ÄĚ 512. In short, since the 1990s and especially under the influence of the limitations of the structural adjustment that our country has carried out in cooperation with the IMF and the World Bank, privatization has become the key word for economic reforms. paragraph describing BENDIB as a "modern word in the sense of market economy",513. The companies' institutional environment was enriched in 2001 by the Law on Guidance for the Promotion of General Principles, the definition of SMEs and the state aid and support policies for this category of companies. All the above measures have been adjusted by issuing Regulation N on the Development of Investments in 2001, which remains the main reference for investments in Algeria to this day. This new investment law contains provisions on: 514: Decentralization of ANDI (ex APSI) activities through the establishment of regional offices. The National Investment Council (CNI). (E du ) The main objectives of this law are to facilitate the access of SMEs to the services and benefits offered by the support systems and to encourage the establishment of shelters in favor of 510 Sadi N.A, Opcit, P Bendiff Hocine. The Privatization Process in Algeria: Strategy, Assessment and Prospects", Economic Forum, September 24, 2008, Lausanne Switzerland 512 Isli M.A "Enterprise creation in Algeria", CREAD Notebooks No. 73, 2005, P Bendib R, "The state, reindeer "i of the Crisis, Elements for a Political Economy of Transition in Algeria", OPD, 2006, p. Proceedings of the National Meetings of SME's, January 2004, p. 34. (Report from the Ministry of Small and Medium-sized Craftsmen Enterprises) 169

173Chapter IV: Application of SMEs to Algerian SMEs to promote the emergence of new SMEs, promote the structure of productive SMEs, promote creativity and innovation, promote the export of goods and services and promote promote the dissemination of SME information. We are seeing a renewed interest in entrepreneurship in Algeria as a result of this new investment law of 2001 and the new guidance law for the promotion of SMEs. In this context, various government measures are being taken in Algeria to support the development of SMEs and represent undeniable efforts to promote these companies515. Various agencies and support structures have emerged, including ANGEM 516 and CNAC 517, as well as the creation of one for the modernization of companies responsible for the agency called ANDPME 518 and the creation of two organizations responsible for guaranteeing loans provided by SMEs, FGAR 519 and CGCI-SME 520, but much needs to be done or perfected here Sinn 521. An unfinished framework institutional reforms have had the remarkable consequence of reviving privately owned SMEs on the economic scene. 2. Some statistics on SMEs in Algeria: According to Verstraet T, the assessment of the entrepreneurial dynamics of a region or a country consists in focusing on four main variables that we can quantify: birth, development, decline and disappearance of companies 522 Our analysis of SME Dynamics in Algeria will focus on evaluating data related to three variables: startups, reactivations and delistings of these companies. SME year at the beginning of the year Table N 9: Demographic data for private SMEs Newly established SME write-offs at the end of the year Newly started companies Birth rate 523 Death rate .64% 1.57% .13% 1.48% .49% 1.19% .69% 1.126% .04% 1.129% .31% 2.96% Source: Azouaou Lamia, Ali Belouard Nabil, "The policy of upgrading Algerian SMEs, stagnation or a new beginning", PS2D Magazine, Hammamet , 2010, P7 5 Lamia, Ali Belouard Nabil, "The policy of upgrading Algerian SMEs, stagnation or a new beginning", PS2D review, Hammamet, 2010, P7 516 National Agency for Management of Microcredit. . Business Creation and Territories‚ÄĚ, Tamanrasset, December Verstraet T, Opcit, 2005, P birth rate = (number of active SMEs / average SME population) * 100 Taking into account the following: number of active SMEs = newly created SMEs + reactivated SMEs average population of SMEs = (population of SMEs at the beginning of the year + population of SMEs at the end of the year) / 2,524 death rate = (number of deleted SMEs / average population of SMEs) *

174Chapter IV: Application to Algerian SMEs This table shows that during this period there was a strong increase in the number of SMEs created, with an average creation of SMEs per year, while new creations were first realized in 2017, and the birth rate showed a slight development during this period, corresponding to an average annual rate of 10.05%. Mortality also shows a slight deterioration over the same period with an annual average rate of 1.30%. The mortality rate for 2009 is 2.96%, which is well above the average annual rate for the past five years. As these numbers continue to rise, we continue with a report on Algerian SMEs over the past two years. 2.1 The main components of SMEs in Algeria: The population of small and medium enterprises consists mainly of three components: private SMEs, public SMEs and artisans. At the end of the first half of 2013, the national economic landscape consists of SMEs, of which more than 90% are very small enterprises (TPE). Indeed, the typology of the entrepreneurial population in Algeria shows a clear lack of medium-sized enterprises and an insignificant number of large enterprises, which can hinder the realization of the large projects carried out in the country and the implementation of the new industrial development policy % of Algerian SMEs are legal entities, the rest are natural persons with a share of 18.27% or companies in the craft sector with a share of 22.57%. In addition, there are 547 EPE companies. Table N 10: Total SME position at the end of the first half of 2013 SME types Number of SMEs Share % Private SMEs Legal entities .09 Natural persons .27 Craft activities .57 S /Total .93 Public SMEs Legal entities 547 0.07 S / Total 0.07 Total Source : Information bulletin SME statistics This table shows a gradual development of the total population of SMEs in their main components over the past two years. Data from the Ministry of SMEs and Handicrafts shows that the number of public SMEs has decreased in favor of private SMEs, which is due to the privatization process. According to the Ministry of SMEs and Handicrafts, private SMEs have made significant progress and made steady progress in terms of key macroeconomic indicators. Figure N 22: SME population 1st quarter 2013 in % 525 El Bahth, Review of the Directorate General for Scientific Research and Technological Development, N 03-4. quarter 2010, 171

175Chapter IV: Application to Algerian SMEs 18.27 22.57 0.07 59.09 Private SMEs Legal entities Private SMEs Individuals Private SMEs Craft activities Public SMEs Source: SME Statistical Information Bulletin The following table shows a gradual development of the total population of SMEs in their main components for several years. Table N 11: The development of the SME population in Algeria Year Private SMEs Public SMEs Crafts in total Source: Information bulletin on SMEs and craft statistics process. The number of SMEs created in the first half of 2013, all jurisdictions combined, is SMU. The delistings affected private SMEs, while the resumption of activity affected companies. Overall, the change between H1 2012 and H1 2013 is 8.81%, all jurisdictions combined, representing an overall net increase in SMEs. Table N 12: Observed movements in the demography of SMEs Type SME 2012 Movement SME 1st half 2013 Fund Reactivation Scrapping Growth Legal entities Natural persons Craft activities Total private SMEs Source: Information bulletin SME statistics Table N 13: Development SME (1st half) 2013 ) 172

176Chapter IV: Application for Algerian SMEs Type of SMEs Number of SMEs 1st half 2012 Number of SMEs 1st half 2013 Development Number I % Private SMEs Public legal entities .50 S/Total .50 TOTAL ,81 Of which: legal entities Persons (private and public), 37 Source: Information Bulletin SME statistics This table illustrates the development of private SMEs with its components during the reporting period. We note that there is a significant increase among private SMEs, represented by 8.82% of SMEs. Ahmed Bouyacoub points out that this aspect of dominance is not limited to the Algerian economy. Many developed countries have the same data on the prevalence of this type of business, such as France, Spain, Germany, Italy and the United Kingdom, reporting the following percentages respectively: 93.5%, 94.8%, 86%, 90, 6% and 90% 526. We have divided the number of private SMEs as follows: Figure N 23: Distribution of private SMEs 18.27 22.57 59.09 legal persons natural persons craft activities This graph explains that 59, 09% of SMEs - Population represented by legal entities or companies. followed by craft activities with 22.57% and natural persons with businesses in last place. Comparing these statistics with the 1st half of 2012, we see that private SMEs registered an increase of 8.82%, which means a net increase in units distributed as follows: legal entities with, natural persons with and craft activity with companies. For its part, CNAS points out that the start-ups registered in the first half of 2013 were new SMEs in the "legal person" category, as they were among the many start-ups related to radiation, as shown in the following table: Table N 14: Development of private SMEs by activity 526 Abderrahmane Abdou, Bouyacoub A, Michel L and Mohamed M, "Entrepreneur et PME; Franco-Algerian approach", Harmattan, 2004, pp. 45-173

177Chapter IV: Application for the Algerian SME Activity Area 1st Semester Share % 1st Semester Share % Development Agriculture, 0.01 7.63 Hydrocarbons, energy, mining and related services BTPH , 0.50 10.08 , 0.26 5 .10 Manufacturing 0.03 1.8006 1.8006 1.3006 Stat. ist Information Bulletin One of the objectives of the modernization is to give Algerian SMEs the confidence to invest in high-quality sectors that offer higher added value and account for a significant part of competitiveness. Nor to focus on operating in standard niches with low innovation rates and less openness to competition 527. The table confirms the investment situation of SMEs in Algeria, where there is a high concentration in the service sector hotels) and restaurants, the real estate sector) with a rate of 49 .20%, which corresponds to an increase of 11% from the first half of 2012 to the first half of 2012. Another sector most controlled by entrepreneurs with a low level of education is clearly that of construction and public works (BTP), with a percentage of 33.26%. This increase is partly a result of government policy aimed at improving basic infrastructure. The state has mobilized more than 300 billion USD for the five-year plans ( / / ) 528. Take the industrial sector, which shows an increase of 7.56%, SMEs are mainly activated as follows: for wood and paper ISMME 21.40% Building materials 21.40 % represents PME, PME for ISMME 529 and finally 9337 PME for building materials. 527 Azouaou Lamia, Opcit, P To really face globalization and climb on the same propeller as high-performing countries, the economist Lamiri Abdelhak said at a meeting of concerns that "a country that develops is one that listens to its intelligence" , according to newspaper Le Temps d'Algérie, Thursday, October 29 Steel, metallurgy and electrical industry 174

178Chapter IV: Application to Algerian SMEs SMEs/EPEs represent a minimal share of SMEs and their number increased from 561 in the first half of 2012 to 547 small and medium-sized enterprises in the first half of 2013 (-2 .50%), a decrease mainly due to the increase in the portfolio due to restructuring. Your workforce consists of employees. Activity sectors Industry Services Agriculture Construction and public works Mining and Table N 15: Public SMEs by staff group 1 to 9 employees 19 to 49 employees 50 to 250 employees Number Number Number Number Number Number Total SME workforce % Total workforce 29.25 27.42 33, 64 7.68 2 , TOTAL careers Source: ECOFIE on the website It can be noted that SMEs/EPEs are active in all sectors of the national economy, they are mainly engaged in agriculture with a percentage of 33.64%, 29.25% in industry and only 27.42% in the Service sector. At the end of June 2013, the total workforce of SMEs ² was only registered in public SMEs, which is explained by an increase of 8.2% compared to the previous year % 40.96 26.65 17.55 11.62 3.22 Table N 16: Development of the workforce between Type of SMEs 1st half 2013 Development Number Share % Number Share % % Private SME employees, 0.57 7.76 employers, 0.02 8.82 S/i total, 0.59 8.18 public SMEs, 0.41-4.72 total % % 7.83 Source: Statistical, while public information SMEs only have positions. The jobs created are generally due to the increase in the number of private SMEs, which shows a growth rate of 8.82% from Q1 2012 to Q1 2013; Unlike public SMEs, which are experiencing a decline in jobs, and this has been the case this year. It is clear that this fall in employment is due to an economic event characterized by restructuring and reorganization of the public sector. Mortality of SMEs According to statistics from the Ministry of SMEs and Investment Promotion, private SMEs register 2661 SMEs under closure, figure N 25: Mortality among private SMEs 175

179Chapter IV: Application for Algerian SMEs 2.07% 6.88% 91.06% legal entities natural persons crafts Source: Moral MKB Statistical Information Bulletin Since 2423 companies were deregistered in the first half of 2013, this corresponds to a percentage of 91.06%, this figure is a visible increase compared to the 1st half of 2012, when there were a number of SMEs in 1987. This increase in mortality can also be seen in the service sector. This corresponds to a percentage of 53.53% of the SMEs launched in the first half of 2013, i.e. H. 252 SMEs followed by BTPH with 128 SMEs at a rate of 33. 26% of SMEs failed in 1H. The table below illustrates the mortality rate for SMEs by sector of activity. Table N 17: Mortality private SMEs, legal entities by activity Sectors of activity 1st half 1st half Difference Number Share in % Agriculture and fishing .24 Hydrocarbons, energy .45 BTPH .26 Industry .51 Services .53 General Total % Source : Statistics Information bulletin for SMEs The service sector represents the highest share with 53.53% The table below shows which type of services are most affected. Table N 18: Mortality for SME services in the first half of 2013 Difference in % Transport and communication Retail Horeca Business services Household services Financial institutions Property services Municipal services 0.81 29.68 8.71 27.37 12.72 0.62 0 , 54 0.54 Total services Source: SME Services. Bulletin The previous table shows that trade has the highest percentage with 29.68% of SMEs ie. H. 385 SMEs were registered, followed by the transport sector with 176

180Chapter IV: Application of a rate of 19.81% to Algerian SMEs. This is explained by the facilitation given to young people through the support mechanisms for establishing micro-enterprises such as ANSEG. If we now calculate the mortality in relation to natural persons, we see that 183 private SMEs go bankrupt. The statistics show that 90.71% or 166 deleted SMEs are agricultural companies, followed by 6.56% or 12 health companies and the rest 5 companies with a percentage of 2.73% in Justice. promotion, the population of SMEs is unevenly distributed. The top 10 vilayas most favorable for SME development have a high concentration in the northern region of the country and the plateaus; this corresponds to 53% of Algerian SMEs established in the country. The table below shows the ranking by Wilaya and by number of SMEs. Table N 19: Ranking of the first 12 wilayas by number of SMEs N Wilayas 1st half of 2013 Share in % Change % Algiers Tizi Ouzou Oran Bejaia Setif Tipaza Boumerdes Blida Constantine Batna Annaba Chlef .51 5.94 4.70 4.68 40.1. 2.53 2.50 2.42 7.69 9.14 8.12 9.60 10.06 10.76 9.87 10.50 7. 62 8 .53 6.85 6.33 S/Total 0, 05 8.74 Statistical information first 0.05 8.74 Statistics 0.05 8.74 Statistical information: Bullet. among companies, which is 11.51% of the market share, followed by Tizi Ouzou, Oran, Bejaia with shares of 5.94%, 4.70% and 4.68% respectively. If we make a regional breakdown, we find the following: Figure N 26: Regional breakdown with 0.18% 1.91% 30.54% 59.38% North Plateau South Store South SMEs 177

181Chapter IV: Application to Algerian SMEs The Northern region has the largest share with a percentage of more than 59% representing Algerian SMEs, followed by the Highland region with a percentage of 30.54% representing SMEs' is, while the southern region and the extreme southern region only 10% of the SME population. The year 2013 saw a rather remarkable movement of creation, the following table shows us this observation: Table N 20: Development of the SME region Movements 2012 1st semester. 1st semester Creations Radiation Reactivations Gap North Hauts Plateaus Sud Grand Sud Total Source: Bulletin d Statistical information on SMEs If we want to analyze these regions further, the following table shows us the concentration of SMEs according to Wilaya using the concentration percentage 530: 530 concentration rate = number of SMEs / resident population) *

182Chapter IV: Two-passage of Algeria KMU Table N 21: Concentration of KMU of Wilaya Wilaya Number of KMU 1st half of 2013 Population by Wilaya (RGPH2008) Concentration of the central region of Algiers THE Taref S /Total Oran Ain Defla Mascara Mostaganem Relizene Ain Temouchent S/Total Setif Batna Bourj Bou Arreridj Bouira Tlemcen M Sila Sidi Bel Abess Medea Djelfa Tiaret Tebessa Khenchela Oum El Bouaghi Souk Ahras Saida Saida Naama El Bayadh Be Tichar Naama El Bayadh Behard El Oued Laghou at S/Total Address Tamanrasset East Region West Region Highlands-Plateau Region South Region Greater South ,46 8,301. 1 5.29 13.80 9.80 9.08 10.54 12.68 8.53 6.27 7.52 9.73 13.86 7.82 10.22 7.85 12.26 10.12 7 ,37 10.27 20.56 13.07 8.06 20.62 8.55 9.73 11.98 7.97 13.62 1

183Chapter IV: Application for Algerian SMEs Tindouf Illizi S/Total .44 26.98 12.47 TOTAL .97 Source: Information Bulletin SME Statistics Concentration rate higher than 18%, this corresponds to a number of SMEs, this result followed by the eastern region with a concentration rate of almost 15%, if we consider both the population of the eastern region and the population of the west, we find that it is practically the same results, but the concentration rate of SMEs in the west is lower, i.e. only H. 10%. The southern region has a rate of 12.47%, which is also higher than our region. 3 The importance and role of SMEs in Algeria's economic development: No one can deny the role and importance of SMEs in all economies, as they enable growth and economic development through job creation, value creation, participation in distribution and contribution to income. 3.1 Job creation The trend observed in the evolution of unemployment in Algeria in recent years continues to decrease worldwide, thanks to the contribution of SMEs to job creation, especially from the private sector and the craft sector. For example, data on unemployment in Algeria showed a decrease from 15.3% to 12.3% in the two consecutive years 2005/2006, while in 2005 this rate showed a slight increase of 1.5%. The economic dynamism is primarily due to investment, which faces several constraints in the industrial sector, namely the lack of financial resources, high costs and the centralization of industry. To overcome these difficulties, it is advisable to create small subsidiaries attached to large companies and to use subcontractors. This process makes it possible to build more units that can meet the increasing demand for jobs by creating permanent jobs at a lower cost. Cost. Algeria, like many other countries, has become aware of the importance of SMEs and their significant contribution to employment and has achieved significant shares in this regard, as shown in the following table: Table N 23: The development of SME Jobs PMI in Algeria during Public Private Enterprises Craftsmen in total Source: Ministry of Information Systems and Statistics, Minister for Industry, SMEs and Investment Promotion The figures in the table clearly show a remarkable increase and growth in jobs created by the private sector and craftsmen. in contrast to the public sector, which experienced a particular decline throughout the period, mainly due to privatizations imposed by the law of the market economy. 531 Gharbi Samia, "SMEs/SMIs in Algeria: taking stock", lab.rii Notebook, March 2011, p. 8 180

184Chapter IV: Application to Algerian SMEs Table no. 24: Comparative development of employment in SMEs over the period ( ) years Private SMEs Employment growth (%) Public SMEs Employment growth Employment (%) 0.94% 0, 20%. 02% 0.16% 0.90% 0.32% 0.78% 0.95% 0.57% 0.59% Source: Information Bulletin SME Statistics The figures in the table clearly show a remarkable increase and growth in jobs created by the private sector. i.e. jobs at the end of 2009, unlike the public sector, which saw a particular decline in the period 2004/2009, public SMEs only register jobs as a result of the privatization of public enterprises under the law of the market economy. Creating added value Added value in Algeria is measured by the difference between the goods sold and what had to be bought to generate this revenue. In 1994, the value added for the public sector was 617.4 billion. RSD, which is 53.5% of the national total, while the value added for the private sector, RSD billion, was 46.5% of the national total. From 1998, the respective shares reversed, so that the private sector was at the top with RSD 1,178 billion or 53.6% and the public sector was at the top with RSD 1,019.8 billion or 46.4%. Additionally, it should be noted that more than 65% of value added and employment in developed countries comes from SMEs/SMIs. An economic policy aimed at the creation, promotion and restructuring of SMEs is essential for development. Private SMEs' share of added value increased to 87.64% in 2007, exceeded 84.68% in 2002 and 85.90% in 2005, d the production process and the functioning of administrations. The surplus value is used for: - Compensation for services, labour, capital, financial resources (these are then employees, dividends or interest). - Contribute to the functioning of the administrations, especially by paying taxes. It is therefore clear that the company, regardless of its size, plays a significant role in a country's activity by creating added value and redistributing this profit in various forms among other actors. It should also be clarified that the functions are strict

185Chapter IV: Application to SMEs Not only is the Algerian economy increasingly attributed to this category of businesses, but given its importance in modern societies, it is also attributed to other functions: social, human and cultural. Part 2: Government Support and Financing Mechanisms for SMEs I. Policies and Policies for the Development of SMEs in Algeria: Policies and policies have been put in place to improve the environment in which SMEs operate. These companies often claim that administrative practices (taxes, banks, etc.) as outlined above hinder their establishment, development and growth. a- Support and monitoring institutions: aware of the importance and the risks involved, the authorities have created structures to promote, support and guide SMEs to better identify the vulnerabilities that hinder their survival and well-being among these companies, support centers, incubators, specialized financial companies 11 (SFS) as the creation of various fiscal and financial instruments, between these various institutions and bodies, with reference to: b - The national unemployment fund (CNAC): The fund addresses unemployed people in the age group between 35 and 50 years, engaged in industrial activities and/or services, except for resale as is. The fund also performs the following tasks: - Provides interest-free loans between two (2) and five (5) million dinars; - Personal support of the project managers; - Exemption from VAT for the purchase of investment goods and services that directly contribute to the realization of the investment; - Exemption from transfer tax on the purchase of real estate in connection with the establishment of the activity; - Application of the reduced duty of 5% on capital goods used directly in the realization of the investment. c- National Agency for Youth Employment Support (ANSEJ): ANSEJ is responsible for: - Support, guidance and mentoring of young entrepreneurs; - Support in various forms (financial and non-financial); - Monitoring investments and monitoring the application of specifications; - promotion of all initiatives aimed at creating and promoting jobs; - Plays the role of intermediary between the banks and the various organizations and financial institutions, as well as the investor-entrepreneurs. d- Social Development Agency (ADS): The agency takes care of the development of microcredits especially for citizens without income. e- National Investment Development Agency (ANDI): The main task of this agency is: 182

186Chapter IV: Application to Algerian SMEs - Promotion, development and monitoring of national and foreign investments; - Welcoming and guiding young investors; - Facilitation of all administrative procedures for company formation; - The guarantee of enjoying the benefits (exemption from duties and taxes); - Awareness of potential foreign investors. f-Credit Guarantee Fund for Small and Medium-Sized Enterprises (FGAR): The fund is of particular importance because its main task is to facilitate access to medium-term bank credit in the form of guarantees; To benefit from this guarantee, the project must be: - either the creation of a new economic activity; - Or development and expansion of an existing economic activity; - Or renewing the company's equipment. g- The National Agency for Microcredit Management (ANGEM): The agency provides interest-free credits for the purchase of raw materials for projects whose costs do not exceed dinars. The support provided consists of support, advice and assistance for carrying out the activity. 183

187Chapter IV: Application for Algerian SMEs h ‚Äď The National Fund for the Promotion of Craft Activities (FNPAAT): The fund provides grants for the purchase of equipment and tools for handicrafts and arts. The aim is: - to renew equipment to expand production and improve its quality; - support campaigns; - Education and training for young people; - Rescue endangered activities. i- Subcontracting and Partnership Exchange (BSTP 1993): The Exchange is a non-profit association founded in May 1993 by industrialists for industrialists, which benefits from support from the government and UNIDO (United Nations Industrial Development Organization). The exchange is an industry database and is a form of professional meetings with a mission to bring together SMEs as well as SMEs and large companies. The effectiveness of these various measures remains limited in practice and shows a number of shortcomings. It is particularly about improving the business environment, developing infrastructures and paying more attention to human capital, as it is a source of income. Very important growth to develop and maintain. And to achieve this, it has required the establishment of additional funding and support institutions to carry out a mission fraught with obstacles. These organizations are: Incubators: are support structures for new businesses in their early years; Incubators: in collaboration with the Ministry of Higher Education and Scientific Research and in particular the Agency for Research and Technological Development; Promotion Centres: These are the establishment of 14 Promotion Centers to support project developers: Industrial Competitiveness Fund; MEDA I and MEDA II programs for the modernization of existing enterprises; Investment incentive program for setting up SMEs/SMIs in the National Unemployment Fund; the National Fund for the Development of the Regions of Southern Algeria; The National Fund for Scientific Research and Technological Development; The National Trust for Vocational Training and Apprenticeships; National Guarantee Fund for SME/SMI loans; Creation of a Ministry responsible for SMEs/SMIs to promote the sector (1991). Faced with the obstacles faced by SMEs, measures supporting support and monitoring strategies have been formulated and taken with the aim of protecting and strengthening the industrial structure and the SME sector. These measures include: taxes, VAT reduction, IRG and BIC to promote non-hydrocarbon exports; - Easier access to bank credit and other financing methods to start new businesses, acquire existing businesses and 184

188Chapter IV: Application to Algerian SMEs of expansion and expansion of activities and especially those who choose to innovate; - The significant interest rate reduction; - Reduction of administrative and bureaucratic practices and corruption; - Creation of information services, training and support infrastructures that meet market needs. - Conversion of business parks to business parks and business parks and realization thereof; - Creation of new activity zones that must be a model of their kind in terms of development and be the subject of a campaign to attract domestic and foreign investors. The activities of the beneficiaries must be in accordance with predetermined specifications and in this context are subject to the supervision of the competent authorities; - Construction of new buildings, hotels, parking lots, bank branches; - Ensure better coordination between the different administrations involved in project start-up permits, in order to speed up the procedures and the implementation of investments; - Creation of a national labor market observatory to monitor changes in supply and demand for different categories and qualifications. It could also provide the necessary guidance for the orientation of staff in vocational training and university education; - Improving links between universities and socio-economic sectors by enabling business leaders to act as vocational training teachers; - Enable governments and business leaders to complete their (re)training; - "Selling" the new image of the country at various events such as fairs, exhibition halls, using the various communication and sales promotions 532. II Incentives for the creation and development of SMEs: the first support measures for the creation of SMEs have been carried fruit back in the late nineties. In 1993, the new investment law abolished the ceiling on private investment previously set at the equivalent of I, major texts were adopted to promote the development of private, national and foreign investment with significant reductions in taxes, charges and social contributions and a relaxation of the administrative procedures for establishing companies. In recent years, businesses have started through three processes: "classic" start-ups involving private capital investment (almost 70% of the total), and micro-enterprises by young beneficiaries of the Youth Employment Support start-up support scheme (29%) and small businesses, as a result of employee takeovers of defunct public companies thanks to favorable credit conditions (1%). 532 Gharbi Samia, "SMEs/SMIs in Algeria", LAB.RII Notebooks, Working Papers, N 238, Littoral C√īte d'Opale University, Industry and Innovation Research Laboratory, March 2011, P Publications des Services Economics, the French Embassy in Algeria, "SMEs in Algeria and measures to support their development", January 2012, p

189Chapter IV: Application to Algerian SMEs Recent changes in the legal framework aim to stimulate business development and increase the participation of SMEs in public procurement, in particular: - the obligation of foreign tenderers in public tenders to cooperate with an Algerian resident in order to encourage companies to commit to the principle of resident majority ownership (51-49%), in accordance with the Supplementary Finance Law of 2009; - the law on public procurement, which since July 2010 has granted a national preference of 25% to tenderers with Algerian citizenship; - an amendment to the Law on Public Procurement of December 2011, which stipulates that 20% of public contracts for studies, works and services will be reserved for micro-enterprises whose amount does not exceed MDZD 12 (approx. 120,000). 2.1 Promotion program for access to bank credit and investment financing: While the relaxation of the legislative framework has enabled the development of the private sector, reforms in administrative law, commercial law and taxation are still too slow to meet the demands of the new market structure. The weight and complexity of the administrative formalities discourages many entrepreneurs. Between registration in the commercial register and acquisition of the company's head office, six months pass until a company is incorporated. According to the Doing Business 2012 ranking, Algeria ranks 148th out of 183 countries for ease of doing business (down five places since 2011) and 153rd for ease of starting a business. SMEs' access to bank financing remains difficult, and the authorities have established guarantee funds such as the SME Credit Guarantee Fund (FGAR) and the SME Credit and Investment Guarantee Fund (CGCI). In addition, the state has introduced preferential interest rates for business loans intended for investment (3.5% instead of 5.5%), while the term of loans in this connection has been increased from 5 to 7 years, with the grace period increased from 2 to 7 years. 3 years and can go up to 15 years with a grace period of 5 years. In the Finance Act of 2012, the authorities also ensured that SMEs in financial difficulties could receive help in restructuring their debts and payment from the Treasury of the financial costs and interest associated with their debts. In addition, businesses can benefit from hedging their exchange rate risk, and tax benefits are planned for SMEs in the southern regions. The National Investment Fund (FNI), created in 2009, should also play an increasingly important role in the financing of SMEs, especially thanks to the announced creation of 48 regional branches. Private investment funds to finance SMEs are starting to develop, especially seed and venture capital funds such as Finalep, Maghreb Private Equity and Sofinance, but are still marginal. Finally, recent consultations between government, employers and trade unions have led to a project to list SME securities from 2012 onwards to give SMEs easier access to finance and partnerships with investors. strangers; However, given the small market value of less than 2% of GDP, this project is symbolic. Programs to improve and strengthen the competitiveness of SMEs: In July 2010, the government launched a program managed by the National Agency for the Development of SMEs (ANDPME). and equipped with a budget of DKK 386 billion. DZD (nearly DZD 4 billion) over five years, with the aim of modernizing enterprises to spearhead economic development and the creation of SMEs. The development of 186

190Chapter IV: Application to Algerian SME sectors with high added value, such as engineering, construction, fishing and services, should enable the share of industry in GDP to increase from 5% to 10%. This national program should be complemented by the support program for SMEs and mastery of information and communication technologies (PME II), launched in March 2011, with a budget of 44 million. and a maximum of 40 million from the EU and 4 million of the Algerian state. The program aims to modernize 150-200 SMEs by 2013 in agri-food, construction materials, mechanics, metalworking, chemicals and pharmaceuticals, electricity, electronics and ICT. As part of the bilateral cooperation, the French Development Agency (AFD) financed the Optimexport program from 2007 to 2010 with 2.1 million, which aimed to support the policy of promoting and diversifying non-hydrocarbon exports. 40 companies have benefited from this program. Ubifrance is currently carrying out an advisory mission to Algex, the Algerian national agency for the promotion of foreign trade, with funds from AFD. The German Technical Cooperation Association (GIZ) is also promoting a funding program of 8.7 million. EUR for companies with fewer than 20 employees in period III. Research and innovation policy in Algeria: The innovation policy aims to create an economic dynamism based on the transfer of knowledge and know-how from the areas that generate them to those that use and reproduce them. In Algeria, public research organizations, representing almost all research and development activities, play a very important role in making growth a reality. In particular, policies and programs for the promotion and diffusion of innovation aim to create the framework that will enable the authorities to remove the main barriers that hinder the functioning of the economy and prevent the emergence of interactions that are essential for their functioning correct, the function of the economy A modern economy according to the triptych: business, research and the public sector. To illuminate our working problem, we will first look at the research policy of the Algerian authorities from independence to now, as research is considered an important investment by the institution. The cooperation with the industry also gives it the opportunity to participate in the process of economic development, which ends with the innovation of products or processes that give the company a competitive advantage. Then we are interested in the different innovation support strategies that have been developed in the past and are still being developed. This explains the importance of innovation in business and the extent to which it can be a big problem for public authorities, but unfortunately it takes a long time to translate into reliable action. The third part is devoted to an analysis of the links that may exist between the research and production sectors, taking into account the reality of the partnership between research and industry in Algeria. It is a partnership that must be established with appreciation in the light of the results of the research, where the latter is confronted with different problems and difficulties whose origins are different. In fact, the national innovation system, seen as a coherent set of institutions, organizations and companies that interact with each other and in any case focus on innovation activities to achieve goals that have economic and social implications, cannot function without bridges between the research sectors and the other economic sectors. 187

191Chapter IV: Application to Algerian SMEs better production. This synergistic relationship between the development of a society and scientific research is defined by Kouilsky as follows: "Scientific research is an engine of development. It is the source of progress for our society. It promotes industrial innovation, economic activity, social progress and culture. ." 534. Scientific research activities in Algeria were pushed into the background for a long time. On the eve of independence, scientific research was part of the French system of scientific research. Education and administration had become overwhelming. Scientific research was not treated as a problem until 1970 with the creation of a Ministry of Higher Education and Scientific Research 536. The research was initially supposed to take place within the universities and focus on the research sector Production The economic development created a very high demand, both on the management - and university level, but also addressed the problems of technology selection, engineering and process management that fell within the research area in a special way. The fact is, however, that the real changes in the field of scientific research in Algeria have only emerged in the last two decades, especially with the introduction of the Orientation Law and the five-year projection program for scientific research and development. technological development during this period The national research system has undergone several changes. The main changes and features of this system are listed below. We begin with a historical presentation of the national research system and the principles of the law of 22 August 1998 and its evaluation, and finally we take stock of Algeria's international scientific cooperation. A brief historical recollection of the development of the Algerian research system is necessary. It is relatively new compared to e.g. the research systems of other African countries 537. In order to train a large number of managers and with a very weak colonial legacy, scientific creation activities have long been marginalized. Apart from the unique but fundamental initiatives of ONRS and UNHCR in the 1970s and 1980s, unfortunately interrupted by institutional instability, many researchers agree that the research has not really reached the mainstream. Public and political debates only since the decade a - The period of management of the colonial legacy. While state intervention in scientific research only assumed an interventionist and organized form from the 1970s, the problems associated with its control were scientifically clarified already after independence. Activities were limited to a few research projects initiated by French institutions and carried out. In the 1960s, the creation of the Scientific Research Council (CRS, created in 1963) was a compromise in the relationship between France and Algeria. Although relations between Algeria and France have always been complex, the undeniable willingness to maintain relations and take joint action on a more general level must be emphasized. This desire is reflected in the definition of a new bilateral relationship, even a new model, Djeflat A, "Research and Development and Technological Dominance in the Maghreb: The Sources of the Blockade", CREAD Notebooks No. 29, 1st Semester Ait Atmane Foudil , Opcit, P Khelfaoui.H, "Scientific research in Algeria, between local demands and international trends" CREAD Notebook No. 56, 3rd quarter 2000, pp. 87 188

192Chapter IV: Requesting Algerian SMEs for Post-Colonial Relations through the Implementation of an Exemplary Cooperation Policy. Over the years, the rather unbalanced and tense Franco-Algerian cooperation has mainly focused on the training of scientific and technical skills necessary for the reconstruction and development of the university, as well as on pursuing research projects started before independence. Despite a very ambitious keynote speech, the scientific activity is in reality the result of a personal initiative of mainly European teacher-scientists who remained in Algeria after the country's independence and lived in some institutes (Institute for Nuclear Studies, Institute for Oceanography). ), the Cancer Centre, the Anthropological and Prehistoric Research Centre). But the main concerns lie elsewhere (especially the industrialization of the country), which has led to the marginalization of scientific research. It was only in the early 1970s that the authorities began to realize the role of science and technology in the development process. Scientific research began to become a real issue for Algerian decision makers. Scientific research is deliberately integrated into the government's decisions in its various fields of action. On the institutional level, the first decision of high symbolic importance in 1968 led to the dissolution of the OCS. At the same time, we are witnessing the formulation of a new scientific research policy. b- The new international system Algeria's first attempt to organize research dates back to the 1970s, when the Ministry of Higher Education and Scientific Research (MESRS) was created, which focused on the integration of scientific research into higher education activities. This formation was also followed by the formation of the Provisional Council for Scientific Research (CPRS) in 1971, which replaced the OCS. The debate driven by economic services led to the formation of the National Office for Scientific Research (ONRS) and the National Research Council (CNR) in July 1973. The CNR is responsible for advising the government on research policy issues and coordinating their implementation. ONRS, in turn, is seen as an instrument to implement policy to stimulate and direct scientific research. In 1973, the University of Algeria was essentially three universities: Algiers, Oran and the very young University of Constantine (founded in 1969). By far the largest in Algiers had students. The research was therefore only the work of a few hundred lecturers, often as part of their thesis. ONRS' tasks were mainly directed in two directions: to promote research in universities and to connect and harmonize this research with the socio-economic sector. ONRS very quickly began to develop university research and divided it into two main areas: university institutes, integrated parts of universities and research centers under its direct control. ONRS's main concern was the training of research staff. From 1974 until its dissolution in 1983, this institution supported 109 university research projects and 62 programs. The dissolution of ONRS marked a turning point in the development of the institutional change process in scientific research. His attributes and activities have been transferred. In 1985, the Commission for Scientific and Technical Research (CRST) and the Commission for New Energy (CEN) were established. The CRST established a cross-sectoral coordination and planning committee, which proved to be the privileged body for an integrated research approach involving all relevant actors within the same field. CRST emerged historically as the first 189

193Chapter IV: Request to the Algerian SME Authority to release a certain number of priority national programs by matching the supply of research with the demand for research. Concentration groups have been established to ensure convergence of programs at national level. Several programs have been developed in the following areas: mining, phosphate, metallurgy, foundry, welding, microelectronics, agronomy, technology, agro-food. New institutional changes were made in 1986, leading to the dissolution of the CRST and the creation of the High Commission of Investigations (HCR), which was headed by the Republic. Two main tasks are entrusted to him: a vertical mission (development of new energies with the possibility of establishing research centers in other areas); a horizontal mission (implementation of a policy for the stimulation and coordination of national scientific research). Despite some successes, UNHCR has failed to implement the full program of action for which it is responsible. With the dissolution of UNHCR in 1990, research entered a long period of organizational and institutional instability. Restructuring, mission and name changes followed until the first serious attempts to deal with the SNR were accompanied by the adoption of Law no of 22 August. Therefore, this brief historical overview of the development of the scientific research system in Algeria, as we have outlined it, highlights some remarkable facts that demonstrate the instability of the structures and the inadequacy of the research programs in relation to the objectives. economic and social development. Research and research promotion organizations in Algeria Algeria has established a number of institutions and organizations since independence until today to meet the country's research, innovation and technology transfer needs (see Annex 1 for more information on these organizations). 3.3.Law 98/11: a break with previous practice This law of August 1998 represents a real turning point for Algeria and a major break with previous practice in scientific and technological planning. In fact, before Law N of August 22, the five-year Orientation and program law for scientific research and technological development was characterized by: o the illegibility of the research system, o institutional and organizational instability, o the inadequacy of the research programs with the goals of economic and social development, the perception and role of research in Algeria and the actions of the institutions that have alternated at the forefront of research, law and science Research and technological development have led to the construction of an institutional research building that can ensure the stability of the institutions, the sustainability of the missions, the coherence of the goals and the mobilization of skills, human, material and financial resources. a- The principles established by law 538 Official Gazette no. 62 of 27 August 1998, available locally: 190

194Chapter IV: Application to Algerian SMEs Between 1998 and 2002, a five-year plan for the development of scientific and technological research was drawn up. The law has set many very ambitious and promising goals for an effective revision of the national scientific research system. To remedy the shortcomings of the research system, the principles of Law 98/11 cover several important aspects, which we summarize as follows: Organization and institutional structure: ensuring the sustainability of scientific research activities within a stable institutional framework and coherence between objectives and final mobilization of Human resources. The law defines an institutional system consisting of: a national scientific research policy to coordinate and evaluate its implementation. - The permanent national governing body, responsible for the implementation of national policies in a collegial and cross-sectoral framework, and the secretariat of the CNRST and the cross-sectoral committees. - Cross-sectoral committees responsible for programming, coordination, promotion and evaluation of research activities. - Sector committees established within each ministerial department involved in research activities and responsible for promoting, coordinating and evaluating research activities at sector level - Intermediary bodies in the form of national agencies responsible for promoting and coordinating the implementation of national research programs - Bodies and structures to implement national research programs, including public scientific and technological institutions, the unit and the research laboratory. Programming: One of the most important developments is the return to an old approach, which ONRS has previously initiated and adopted, of integrating research into national research programmes. In effect, the law places the national programming of scientific research and technological development activities within the framework of the implementation of the national overall development strategy. In this way, the socio-economic development goals are organized into 30 National Research Programs (NRPs) based on a "top-down" programming based on the prior definition of research goals and their consideration. supported by the global framework. Funding: The law provided funds for scientific research activities up to 1% of GDP from the year 2000 (Article 21), which also anchored the principle of the uniqueness of the national research budget. This budget includes all operating and equipment credits allocated to the research institutes in the various ministries. All loans intended to finance national research programmes. The law established the principle of one year for the research budget as laid down in the finance laws and set a total amount of AD from all sources for the period. Evaluation and promotion: Articles 32 to 35 of the law define criteria, bodies and stages for the evaluation of activities, researchers, institutions and research programs, namely: Council 191

195Chapter IV: Application to the Algerian SME laboratory and the scientific councils of the research unit (ANDRS and ANDRU), the sector committees for scientific research and technological development and the cross-sectoral committees for programming and evaluation of research activities. With regard to the promotion of research results, the law contains the possibility of far-reaching measures, including: establishment of promotion structures within educational and research institutions, including subsidiaries, establishment of national promotion centers and establishment of research parks in areas with high added value. Human resources: With regard to human resources, the law allows for the mobilization of researchers through: - increasing the potential for full-time researchers to the number of 4,000 researchers - greater involvement of teachers in research activities with the aim of reaching the number. Approval of the special status of the research staff. Promoting the mobility of researchers and teacher-researchers Law 98/11, which aims to create an institutional environment conducive to the functioning of a national scientific research system, is also seen as a break from a period of instability and illegibility. However, the statutory targets that we have summarized above have not been fully achieved. Report 539, published in February 2007 by the Ministry of Higher Education and Scientific Research (MESRS), as well as works published by researchers in the field, allow us to review the activities and priorities established by Act 540, but not completely. At the institutional level: The new law creates several new organizations: - Creation of 21 permanent sector committees - Creation of 639 research laboratories distributed in 8 main research areas - Application of the status of public scientific and technological institution (EPST) to 18 research centers in all sectors - Creation of 8 cross-sectoral committees according to key research areas: agriculture and water resources, raw materials and energy, technologies, education, culture and communication, law, economy and society, housing, construction. However, we point out that certain targets have not been reached. Firstly, since its establishment in 1992, the CNRST has held only one meeting, which hindered the implementation of the decisions taken. Secondly, a permanent national management body was not established, which subsequently made it impossible to undertake coordination, coherence, follow-up and strict evaluation of the research activities that were to form the basis for the development of a new research project Research Act. Thirdly, the cross-sectoral committees did not meet regularly and we regret that the establishment of research centers in EPST followed a logic of legal compliance much more than scientific requirements. 539 Khelfaoui.H, Integration of science in development, North African experiences, ADEES Publisud forlag, Paris, 2006, P Djeflat A, Opcit, P

196Chapter IV: Application to Algerian SMEs In terms of programming: Of the 30 research programs established by law, 27 have been developed and there were 4 calls for proposals for research projects launched between 1997 and 2002. Submission of 2368 projects, of which 1613 were selected and 1168 were implemented. The coverage rate also varies widely from program to program, from 0.5% to 68%. Not all national research programs benefited from the same number of calls for project proposals, nor did they all have the same number of projects. The selected projects were based on 15 pilot organizations from different ministries: higher education and scientific research, national education, agriculture. It was reported that three programs are yet to be developed, namely Industrial Technologies, Culture and Communication and Linguistics. In the absence of a strategy defined by the CNRST, programming was carried out from the bottom up, and in addition, there was a lack of alignment and coherence between the national research programs (in terms of themes) to the social concerns and needs. economic development. A very important point was noted: it is difficult to focus research projects on PNRs as understood in the spirit of the law, according to which research must be primarily based on the socio-economic goals defined in the plans. national development. However, we note that in addition to the National Reform Programmes, there remain 03 other types of collaborative projects and 625 institution-specific projects carried out during the five-year period and remain in compliance, each with its own programming procedures. Financing and valuation. While the total number of completed or ongoing projects of all types is 5,244, less than a third of committed projects (2,000 out of 7,000) are covered by the statutory NRPs and are expected to be evaluated against the principles set out therein. Therefore, it is difficult to prepare an overall assessment of all research activities and all types of projects for reprogramming based on socio-economic development needs and national scientific capacities in human and human terms. With regard to financing, the operating budget for higher education for 1998 was DKK 25 billion. AS. It represents 15.6% of the education system budget and 3.1% of the state budget (scholarships, housing, meals), the rest, about 14 billion DA, 90% is absorbed by the payroll. Therefore, only 1.4% billion is spent on all educational and research activities. That figure is far from what the five-year research plan law foresees, which allocates DA 5.560 billion for this first year, of which DA 1.421 billion is allocated by the National Science Foundation for research projects under the NRP. . With regard to the period, the number of points awarded under the National Fund for Scientific Research (FNRSDT) DA. However, it should be noted that the share of GDP allocated to scientific research (0.23%-0.3%) remains small compared to other countries (2.5%-3% on average). If we compare the budgets actually set aside for research with the budgets set by law, we see that the difference is very large; certifies non-compliance with the obligations in Act 98/

197Chapter IV: Application for Algerian SMEs Table No. 24: Funding under the five-year law and actual subsidy under the relevant annual financial laws (in billions of dinars) Total budget set by law 21.15 31.21 33.66 36.38 36.38 158.78 Actual awarded 5.1 4.1 5.1 4.6 5.6 24.5 Realized/planned (%) 24.11 13.13 15.15 12.64 15.39 15.43 Source: National Association of Permanent Researchers. In H. Khelfaoui, "Scientific research in Algeria: between local demands and international trends", in addition to the figures we present, we must point out that the increase in operating budgets observed since 2002 coincides with the increase in research grants to teachers - researchers. Many irregularities in the financing system, based on the concept of the state budget for scientific research, have not yet been revealed, which causes difficulties in establishing the financial balance and problems in controlling the management of grants for activities. Research due to diversity of stakeholders and different oversight of entities. We would like to point out that the funds allocated to national research programs are not controlled in any way. In terms of evaluation and development, all statutory bodies have been established, starting with the councils for research laboratories, the scientific councils for research centers established as public institutions of a scientific and technical nature, and 21 permanent sector committees, 8 cross-sectoral committees. , Joint Evaluation and Outlook Committee (CMEP), National Evaluation and Programming Committee (CNEPRU), National University Commission (CUN), and finally the National Commission for the Permanent Evaluation of Researchers (CNEC). Despite the effective establishment of these bodies, it is a fact that they have been ineffective. MESRS confirms in its report that the cross-sectoral commissions were unstable due to irregularities in their work on the one hand and the difficulties in mobilizing their members on the other. The PNRs have also been assessed administratively, with the quantitative aspect taking precedence over the qualitative. It also points to the lack of coordination between the evaluation bodies for the different project types (CMEP, CNEPRU, PNR, collaboration) and a body to evaluate research activities at national level. The Board for the Transfer of the Results of Research and Technological Development (ANDREDET) was established with a view to the transfer targets set by law. MESRS also successfully organized a Research for Development Forum, a meeting place for researchers, producers of research products and services with business stakeholders, and identified 277 innovative products and services from 700 selected projects. ANVREDET was again tasked with supporting 469 profitable projects, including 67 patentable, to transfer them to the commercial sector. Despite the creation of bodies to promote research results, it must be recognized that the research and development programs lacked visibility in terms of innovation and the direct impact on the business environment. In addition, it was emphasized that business demand for research, development and innovation was weak. In terms of human resources, almost all researchers were mobilized, including teacher-researchers and 1,247 permanent researchers. The number of mobilized teacher-researchers represents 50% of the available potential, but it is important to note that the number of researchers ranks 194

198Chapter IV: The registration with Algerian SMEs was insufficient and especially that there are differences in specialties and qualities. Other differences in research staff should also be highlighted: 86% are concentrated in universities and only 14% in research centres. Finally, another difficult point is that Algerian scientists living abroad are not sufficiently mobilized. Table N 25: Number of actual permanent researchers compared to the figures projected in the five-year statutory projections 1998. Year Actual figures Five-year statutory projections N.D. Source: National Association of Permanent Investigators. In H. Khelfaoui, "Scientific research in Algeria: between local demands and international trends", in general terms and without going into too much detail, the number of researchers mobilized to achieve the goals set by the law was compared to Insufficient from the numbers. in the following table: 3.4. International scientific cooperation in Algeria National and international scientific cooperation is an important factor for the success of a research policy and forms a significant part of the national research system Algeria's scientific cooperation with other countries takes place in various forms of partnerships. In fact, in most cases it is based on co-financing formulas with bilateral financial participation. The best example of this collaboration is the multi-year programs of the Algerian-French Joint Committee for Evaluation and Prognosis (CMEP), which enabled 1,000 PhD students to study in France in 1997/97, ‚Äč‚Äčof which 80 % for a science and technology degree. Scientific relations between France and Algeria involve different actors and institutions as well as the implementation of an innovative approach aimed at harmonizing the interpersonal networks that exist between the two countries542. In this context, the Joint Assessment and Forecasting Committee (CMEP) has contributed to the training of many Algerian academics and researchers, contributed to the realization of joint scientific projects and to promote the mobility of teachers and students. One of the most important aspects of Algerian international scientific cooperation after independence was the training of the Algerian scientific elite abroad, in France, but also in England, North America, the Soviet Union and Arab countries. However, in recent years we have seen an evolution in the forms of collaboration and partnerships (jointly supervised theses, collaboration between university laboratories, exchange of human skills, etc.). Status of the cooperation between MESRS and the European Union The Euro-Mediterranean cooperation with the Ministry of Higher Education and Scientific Research (MESRS) is in full swing. 541 Khelfaoui H, "Science in Africa at the turn of the 21st century: Science in Algeria - Part 1: Institutions", Research Institute for Development (IRD France), European Commission, French Ministry of Foreign Affairs. December 21, Bettahar Y, "The Role of the Joint Assessment and Forecasting Committee in Franco-Algerian Scientific Partnerships", AISLF/Tours Colloquium "Science and Technological Innovations" 195

199Chapter IV: Application for EU-funded programs for Algerian SMEs 543 namely the EUMEDIS (Euro-Mediterranean Information Society) program and the TEMPUS programme. As part of the EUMEDIS programme, the Center for Studies and Research in Scientific and Technical Information (CERIST) is planned as a priority. It is important to point out that, in order to develop the information society, the Algerian state has supported the creation of the ARN (Academic Research Network), a national academic and research network that connects all universities, centers and research units at present. be expanded and connected to the European GEANT network. The EUROMED CONNECT project is part 2 of the EUMEDIS initiative. The aim is to connect the research networks in the Euro-Mediterranean area. The number of Euro-Mediterranean partner countries is 12, including Algeria. Algeria's participation in this project is particularly important as it is part of a group of highly qualified research networks whose experience in academic networks can only benefit higher education and research. As for the TEMPUS programme, Algeria was included in the program in October 2002 together with the countries of the MEDA area. It benefited from a budget of 08 million euros. The participants in the program are universities and research institutes. It should also be remembered that Algeria has also participated in several PCRDs (Research and Development Framework Programme). Part 3: Innovation in Algerian SMEs: There is a very large literature on innovation, several books, a large number of articles and several publications on this topic. On the other hand, research hardly focuses on the most important determinants of innovation. in relation to SMEs 544. Most research focuses on the factors that enable SMEs to survive. We can mention the example of financing, but we rarely find studies that look at the factors that contribute to growth, such as: B. Innovation 545. Therefore, investigating innovation as a driver of growth in SMEs deserves our full attention. Some authors have even pointed to the need to examine innovation in specific contexts, such as SMEs 546. In Algeria, SMEs were marginalized in favor of the large dimension until the late 1980s. They have focused on very few technology-intensive activities. However, with the introduction of economic reforms in the early 1990s to liberalize the national economy, the public sector has introduced a support and financing program for SMEs. The main objectives of all these measures are as follows: to promote the structure of productive SMEs, to promote the dissemination of information about SMEs. And to promote creativity and innovation, the latter is an answer to the problems of national and international competition. That is why the public sector finances a large number of initiatives to promote innovation. It is true that this concept is so widespread that 543 Rebbah H. "Towards enhanced Euro-Mediterranean Research and Development Cooperation", Euro-MEDANET Seminar, March 22-23 Halilem N. and St -Jean Etienne, "Innovation within the SME: Proposal for a Conceptual Framework, Communication 5th International Congress of Academy of Entrepreneurship and Innovation, Laval University Quebec, Canada, Baldwin et al., "The Determinants of Innovation Activities in Canadian Manufacturing: The Role of Intellectual Property Rights", Analytical Studies Branch, Research Paper Series, Statistics Canada, N 122, 2000, P. Harbor and Blackman, "Innovation, the other is linked to performance", Performance Improvement, Vol. 45, No. 2, 2006, p.

200Chapter IV: Application to Algerian SMEs. Knowing how innovations can be developed and what factors trigger the innovation process is a real concern for many companies. There are many solutions available: there are funding, methodological guides, skills and specific organizational types, but faced with all these answers, the company can be lost in choosing the most appropriate solutions 547. So to support SMEs and create a stimulating environment . develop its innovation activities, a national policy has been introduced under the responsibility of the Ministry of SMEs and Crafts, with the aim of encouraging state intervention to implement a systematic policy for the promotion and development of technical progress within the framework of a national innovation system with two dimensions, which we summarize below 548: Establishing an innovation policy that defines a set of goals and coherent objectives and developing an action program and establishing a number of institutions and bodies responsible for implementing and monitoring this policy. Drive innovative initiatives in the company, strengthen technological opportunities and introduce new communication and information technologies. To put this policy into practice, a National Agency for the Development of Small and Medium Enterprises (ANDPME) was created by decree of 3 May. However, we cannot assess or assess the measures taken by the institutions responsible for this, as no assessment has been carried out so far. Also at the beginning of 2008, the Algerian state created a new department of innovation policy within the framework of the new industrial strategy within the Ministry of Industry and Investment Promotion, which is responsible for managing the tasks assigned to it by MIPI. To succeed in this mission, a national system of industrial innovation (SNII) has been established based on: At the national level: Governments must rely on two agencies to implement incentives that promote the development of their industrial strategy. ANII (National Agency for Industrial Innovation) and ANVREDET, which would be responsible for the creation of companies from university spin-offs. This led to the creation of a statistical service that can measure and evaluate the individual or collective expenditure on research, development and innovation in any company. At the sectoral level: Governments should establish Centers of Innovation and Technology Transfer (CITTs) which provide sectoral technology support essential to business: they will provide conventional services, innovation support, technology monitoring and information, and support industry in the formulation of technology and innovation needs; technology transfer, technical support for technology upgrades, certification and standardization and specific training. For this purpose, three new centers will be created in addition to the two existing centers for innovation and technology transfer: CITT for mechanics and metalworking, CITT for agriculture and the food industry and finally CITT for plastics, paper and packaging. 547 A.FAYOLLE, "Entrepreneurship: learning to take", DUNOD Edition, January 2004, P MPMEA Document, "Support Policies for Innovation in SMEs", February

201Chapter IV: Application to Algerian SMEs. At the regional level: ANII should have its own decentralized funds in wilayas, including the following eleven representing 55% of Algerian SMEs: Algiers, Oran, Tizi Ouzou, Bejaia, Setif, Blida, Chelef, Boumerdes, Constantine, Annaba, Tipaza . Based on successful experiences in this area, interfaces between university and industry should also be established. Under the coordination of ANVREDET, incubators and nurseries will play an important role in this system. At funding level: the DNA must have several instruments: funding through grants up to 50% of the responses of an R&D project submitted by a company or organization, annual subscription to CITT or CRD based on the amount to be carried out with companies. It should be noted that based on the unclear experience in the Maghreb countries, financing the CITTs through a tax is not conducive and it would be appropriate to give the CITTs an annual base allocation of around 30% of their budget. to the recommended subscription. ANVREDET, in its new composition, must have funds to support research projects with up to 30% of the expenses. Finally, the tax deduction for companies' R&D expenses will in a first phase be reduced with state funds in the form of a tax deduction of at least 50%. At the legal level, this program must be accompanied by a system consisting of two parts: a first part of the laws to be changed, in particular the texts on research, the status of the researcher in a company and industrial property. The second includes the law to be drawn up, especially the innovation law to integrate the PhD student in the company, the funding methods, the interface structures and finally the decrees establishing the ANI and CITT. The goals that the authorities have set themselves to lift innovation for the development of the country's industry make us believe that there really is a desire to break with previous practices. But according to interviews we have conducted with managers of MIPI's innovation department, no concrete steps have been taken because the department is newly established. According to the same source, INAPI and ANVREDET only offered short-term internships and training to the department's staff. At this point, we present the main support measures for innovation in Algeria, with an emphasis on support measures for the integration of innovation in SMEs. I. The main innovation support measures in Algeria: This work summarizes the work carried out by ARABI on the main innovation support measures in Algeria. The latter has carried out various initiatives to promote innovation with the aim of sustainably strengthening the companies' competitiveness by creating framework conditions that promote innovation. These main measures to monitor innovation activities in Algeria are: 549 Arabi KH, "Institutional and organizational barriers to the dynamics of innovation through learning in Algeria", thesis at the University of Bejaia, Algeria, 2007, P

202Chapter IV: Application to Algerian SMEs 1.1 The Technology Park or Cyberpark Project Sidi Abdellah Currently there is only one cyberpark or technology project in Algeria called Cyberpark Sidi Abdellah. It is the first technology pole in the national territory, it was founded in 2001 and is divided into three districts: the technology park, the innovation district and the support structures. Presented in terms of the organization of production and innovation activities, it is also considered a pole of economic growth and a factor of industrial restructuring 550 with the aim of concentrating resources to generate externalities generated by several factors: geographical proximity, resources for productivity increases, innovation. .. This kind of production and innovation activity is central to the development strategies that PED 551 has implemented in recent years. In this context and following the example of the emerging countries, the Sidi Abdelleh project was created through a collaboration between the Wilaya of Algiers, the Minister of Posts and New Information and Communication Technologies, and the Minister of SMEs and Crafts. The main purpose of this pole is to create an innovation district with corporate hotels and business centers, a research center, a telecommunications complex, especially for call centers, and finally a headquarters for the national advertising and development agency. technology parks. The costs amount to around 100 million euros. Sidi Abdellah Technology Park is based on three components 553: An information and research component aimed at: The establishment of an Institute of Information Technology (i.t.i) A Center for Research in Information Technology (CRTI) involving sector institutions such as the Institute of Telecommunications (ITO) , Center for Studies and Research in Telecommunications (Evidence). A business component: - Innovative companies - New companies after their start-up phase, support, housing for a certain period before moving to other more sophisticated properties. - Regarding high-tech products and service companies, a platform for Internet Service Providers (ISP). An incubation and support component: - Creation of a system that allows the promotion of incubation and innovation agencies considered as a priority axis - Incubators - Seed capital funds - Venture capital institutions (public and private) - Partnerships and alliances. 550 Aissat Leghnima Amina, "The Difficult Promotion of Innovative SMEs in Algeria", Notebooks of LAB.RII, University Littoral C√īte d'Opale, N 279, February Kerzabi A, "Family Businesses in Algeria: From Independence to Conservatism", International Symposium "The vulnerability of small and medium enterprises and SMEs in a globalized environment", 11th Scientific Days of the Entrepreneurship Network, 27, 28, 29 May 2009, INRPME, Trois Rivi√®res Canada 552 ANIMA Report (Euro- Mediterranean Network of Investment Promotion Agencies) ), The intelligent Mediterranean, innovation, technology hubs and investment attraction, ANIMA note and document no. 9, April 2005, P. Aissat Leghnima A., Opcit, p. 14 199

203Chapter IV: Application to Algerian SMEs The Cyberpark should bring together all types of domestic and foreign companies that offer products or services, especially in information and communication technology (ICT), whether related to production, communication and distribution in connection with operational activities. Technology transfer centers, business incubators, business incubators, small business support offices and an ICT observatory are part of the technopolitical park, along with telecommunications, audiovisual and aerospace activities. The goal is to create a dynamic reception space for ICT companies with a HIGT-TECH infrastructure and smart offices at affordable prices, also to create a laboratory that facilitates innovation through strategic partners and incubators, and to create a space that leverages incentives through a reductive tax regime to attract foreign investment and facilitate technology transfer. The objectives of this park include: - To create a dynamic reception area for ICT companies with high-tech infrastructure and intelligent offices. - Create jobs in the ICT sector, increase investment in the private sector, prevent brain drain by creating jobs for young graduates. - Increase the birth and spin-off rate of ICT-oriented companies - and ultimately develop a strong export-oriented ICT sector. Apart from this project, there is no other kind of scientific and technological agglomeration in Algeria. Nevertheless, Algeria is creating mechanisms to monitor small businesses using the terms business incubators and incubators554. In a note from the Director General of the National Agency for the Promotion and Development of Technological Parks, Sidi Cyberpark Abdellah is presented as a real ICT accelerator in Algeria, as this project will generate "more investments" and promote "business expansion". He also assessed that this project will increase "the innovative capacity" of the local ICT sector through "technology transfer and commercialization of new products and services"555. Apart from this project, there is no other kind of scientific and technological agglomeration in Algeria. . So far, only a few orders have been issued relating to the establishment of nurseries and hatcheries. Therefore, on February 25, a decree was issued on the standard status of incubators in Algeria. It defines business incubators as public facilities of an industrial and commercial nature. After the promulgation of this decree, in 557 many more decrees were published on the establishment of incubators and business relay workshops. The number of wilayas affected by incubators is eleven: Algiers, S√©tif, Constantine, Oran, Laghouat, Batna, Blida, Tlemcen, Annaba, El Oued and Tizi Ouzou, while there are four wilayas affected by "relay workshops" : Algiers, Setif, Constantine and Oran. 554 Kendel H., "SME Development Strategy in the ISMMEE Sector in Algeria", DEA memoir: Competitive Intelligence and Intelligence/crrm Marseille, September 2003, P Kerri N, Dr. Haichour visits the construction site of Sidi Abdellah Cyberpark (Algiers): "We want to make Algeria a dragon in Africa" ‚Äč‚ÄčAlgerian newspaper El Watan March 29 Available at the Algerian Ministry of SMEs and Crafts. Implementation order n) of 25 February 2003 on standard status for greenhouses. To be found in Statstidende no. 67 of 5 November 2003 and in Lovtidende no. 36 of 6 June. Available per 200

204Chapter IV: Application to Algerian SMEs 1.2 The support and aid program for SMEs Algeria has taken many support measures to integrate innovations in SMEs. The measures already adopted relate to the SME support and promotion programme, which is managed by the Ministry of SMEs and Crafts. "The flagship action in this program is the adoption in December 2001 of the guidance act for the promotion of SMEs. Profitability and their competitiveness through various interventions such as: integration of the SME sector in the scientific and technological environment, creation of regional research and innovation networks, training of SME managers, training of personnel responsible for innovation and organization of national competitions. This is undoubtedly work aimed at restoring the role and place of SMEs as driving forces for the country's economic growth. At the same time, the foreign partners 559 from the Ministry of SMEs and Handicrafts cooperated within the framework of supporting SMEs on the SME development support programme. However, these support programs developed by foreign actors have certain shortcomings. The most important one is the one that largely explains the failure of these programs, namely the lack of publicity that SMEs benefited from (blocking of information, slow dissemination). 1.3 Establishment of ANDREVET and INAPI The National Board for the Promotion of the Results of Research and Technological Development ANDREVET was established by the Ministry of Higher Education and Scientific Research. Its task is based on the implementation of a relationship with the relevant structures and bodies, the national technology development strategy. It is responsible for identifying and selecting the research results to be financed and contributing to greater efficiency in the utilization of research results and in the development design of systems and development methods. We find that the state's discourse is far from consistent with reality. Despite the significant flight of Algerian scientists, no measures were taken to prevent their flight. Another point that constitutes a major handicap in the research system. This also shows the lack of a real policy to stimulate research and thus innovation. Algeria has been far from the research norm of 1% of GDP since 1996. 558 Arabi Kheloudja, "Institutional and organizational barriers to the dynamics of innovation in the apprenticeship system in Algeria: the case of the Bejaia region", Doctoral thesis in economics, University of Tizi Ouzou, 2007, P The support programs for the development of SMEs are: UNIDO (United Nations Industrial Development Organisation) the program for the improvement, certification, quality and standardization of enterprises. The European Union's EuroDevPME program for modernization. The French Development Agency (AFD) on the opening of a line of credit and support for exporting SMEs. 201

205Chapter IV: Application for Algerian SMEs Year Code Table N 26: Comparative data on research funding 1996 Country Share of GDP allocated to research Algeria 0.28% Tunisia 0.70% Ghana 1.0% Europe 3.0% USA 5.0% Source: Salem.A, "Export and Innovation", CREAD Notebooks No. 43, 1st Quarter 1998 According to Act No. on Five-Year Orientation and Program Act for Scientific Research and Technological Development, the total estimate of research expenses for the period from the share of ‚Äč‚ÄčGDP in five years, spending on scientific research and technological development increased from 0.14% in 1996 to 1% in 2002, but the target was not reached. In 2004, R&D spending was only 0.35% of GDP. 560 According to the draft law on scientific research and technological development, the share of GDP devoted to research expenditure in all its dimensions will gradually increase by an average of 0.17% per year to reach the target of 1% of GDP in 2010, i.e. For 1998, the operating budget for higher education 25 billion dinars, that is H. almost 250 million euros, which corresponds to 3.1% of the state budget. 40% or RSD 9.3 billion of this budget is for student social work (scholarships, accommodation, meals), the rest, i.e. 14 billion RSD, 90% is included in the wage bill. Therefore, only 1.4 billion dinars will be set aside for all teaching and research activities. In 2017, the budget for higher education amounted to 212 billion RSD, a sharp increase compared to 2017. We note that we are still far from the recommendations of the law on the five-year research plan, which provides 5560 billion RSD from 563 RSD. The share of GDP devoted to research expenditure in all its dimensions will gradually increase by 0.18% per year until 2009 to reach the target of 1% of GDP in 2010; this has not yet been confirmed. Table N 27: Annual share of GDP allocated to scientific research (in DA million) Expenditures related to the research environment and PNR Capital expenditure (infrastructure and large equipment) Average total expenditure Total expenditure Gross domestic product R&D expenditure/GDP expenditure ratio 0.22% 0 .38% 0.56% 0.74% 0.92% 1% Source: Ministry of Higher Education and Scientific Research, University of El Oued, available at 560 CNRS website. towards the world. Journal du CNRS Atomic energy: the new momentum 195. April 2006/Nuclear energy/Horizon. 561 French Development Agency (AFD), "Higher Education in the Middle East and North Africa: Achieving Financial Viability while Pursuing Excellence", Law No of 29 December 2010 on Financing for 2011, Official Journal No 80 of 30 December 2010, S28. Available from Khelfaoui H, Opcit, 2001, pp. 20 202

206Chapter IV: Application to Algerian SMEs Many experts lament the shortcomings of the system for evaluating researchers. This failure is undoubtedly one of the main reasons for the low productivity of scientific research. The errors in the assessment system stem from a lack of identification of properties in research. The state does not strive to adapt the means by which it can search for specific goals to be achieved. No national body sets real priorities according to the country's economic and social development strategy. Another source of evaluation deficiencies lies in the composition of the scientific advisory councils of universities and research institutions. Logically, the assessment from the faculties' and/or universities' scientific councils could limit the damage by selecting the most valid proposals from laboratories and research teams. But in most cases things do not go as desired, due to the composition of these councils and the frequent lack of recognized and undisputed scientific authority among teachers of master rank. This situation has been described as the laxity of the National Universities Commission in evaluating these teachers. Another very important point that highlights that the Algerian university suffers from its weak ability to design and implement a real policy in relation to Status 564. Aiming to strengthen the national system of scientific research and technological innovation, the state mobilized more than 200 billion dinars for this period to build 565: 400 laboratories, 02 centers and 03 research units; recruit more than 2,000 technicians and engineers as support staff for research laboratories; start building 100 new research centers by 2012; Creation of 17 technical platforms, 05 technology platforms and 11 supercomputer centers; Recruit 3,000 researchers by 2012; Mobilize over 40 billion AD to purchase critical research equipment. Regarding the achievement of these goals, it should be noted that there has been some delay in achieving these goals. For example, only eighteen (18) of the 100 new research centers planned for 2012 have been realized, a shift from 82 centers (566). The same applies to the number of researchers who did not reach the 3000 mark in 2012, but is limited to only 2066, after 934 researchers 567. In terms of scientific results, the number of publications in 2009 reached Algeria, which ranks third in scientific research in Africa, after Egypt (2nd) and South Africa (1st), in Q1 2010, 564 Ghalamallah M., "The career crisis of university teachers", CREAD Notebooks #-63, Q4 2002 and Q1 El Bahth, Review by General Directorate Scientific research and technological development, Opcit, P. Website accessed 30/9. S. Boughazi, "Scientific Research Still Connected to Laboratories," 10/2012, available at 203

207Chapter IV: Application for Algerian SMEs according to UNESCO 568. Although the number of publications in Algeria showed some increase in 2009, this number is still low compared to other African countries. A study by the Thomson Reuters group entitled "Web of Knowledge, Essential Science Indicators" found that Algeria produces only 50 scientific publications per year. 1 million people. It has thus been surpassed by Tunisia, which produces 270 publications per year. 1 million inhabitants, followed by South Africa (150) and Saudi Arabia (75) with 569. In addition, Djeflat noted that research in Algeria in 2010 with the filing of 76 invention patents by local researchers did well 570. The Algerian universities made a significant improvement in the international ranking. At the end of 2008, only the universities of Tlemcen and Batna were visible in this ranking. In January 2011, the University of Constantine took over the leadership of the Maghreb level 571, see the table below. Table No. 28: The first 15 institutions of TOP 25 universities in the Maghreb 1 Mentouri University of Constantine 8 Mohammed Premier Oujda University (Morocco) 2 Al Akhawayn University Ifrane 9 Batna University (Morocco 3 Faculty of Natural Sciences Rabat 10 Virtual University of Tunis ( Morocco ) 4 Abou Bekr Belkaid Tlemcen University 11 Abdelmalek Essaadi University (Morocco) 5 Cadi Ayyad University (Morocco) 12 University of Algiers 6 USTHB (Algiers 13 M'Hamed Bougara University of Boumerdes 7 Mohammadia School of Abbas 14 Ferhacco) Sétif University 15 Djillali Liabès University Source: El Bahth, op.cit, p. 11. In addition, several scientific devices have been developed by universities or research centers during this period, which are essentially: a meter, intelligent electric power electronics and a multi-chamber smart greenhouse made by researchers at Chle University, a 100% Algerian laser prototype manufactured by the Center for Development of Advanced Technologies (CDTA), a water purification system with ozone invented by researchers at the University of Djillali Liabbès Sidi Bel Abbes. Solar panels that harness solar energy using silicon manufactured by the Silicon Technology Development Unit (UDTS). Pr Hafid Aourag, director general of scientific research and technological development, stated that in 2012 there are 43 research centers in Algeria, i.e. H. 568 El Bahth, Revue de la Direction Générale de la Recherche Scientifique et du Développement Technologique, op.cit. , P: A. Semmar, "Algeria produces only 50 scientific publications for 1 million inhabitants", 2010-12-27, M. Atmani, "Towards the creation of a national innovation system in Algeria", Journal of the General Directorate for Scientific Research and technological development, op.cit. 204

208Chapter IV: Application to Algerian SMEs. The main tasks of these research centers can be summarized as follows: 573: Research Center for Materials Recovery (C.R.E.M): Its task is to recover the raw materials necessary for the development of new energies. Center for Radiation Protection and Safety (C.R.S): Its task is to research and develop devices for external, internal and medical dosimetry. Radiological treatment of the environment, nuclear safety of radiation protection facilities, radiation treatment. Center for Development of Nuclear Techniques (C.D.T.N): Its mission is research and development in radioisotopes in basic and applied nuclear physics. Research Center for Scientific and Technical Information (C.E.R.I.S.T): Research and development to build a national scientific and technical information network. Center for Renewable Energy Development (C.D.E.R): Scientific and technological research and development in renewable energy such as solar, geothermal and wind energy. Center for the Development of Advanced Technologies (C.D.T.A): Research and development of information technology, lasers, plasmas, robotics and thermonuclear fusion. Center for Scientific and Technical Research in Physico-Chemical Analysis (C.R.A.P.C): studies, research and expertise in Physico-Chemical Analysis. Scientific and Technical Research Center for Dry Areas (C.R.S.T.R.A): conducts research in date palm (biology, genetics, pathology) and in dry soils (pedology, fertilization). Research Center for Applied Development Economics (C.R.E.A.D): study of the economic and social conditions necessary to strengthen cross-sectoral integration, creation and technological dominance and effective management at macro and micro levels. Center for Scientific and Technical Research in the Development of the Arabic Language (C.R.S.T.D.L.A): Research in Linguistics, Didactics, Lexicography, Terminology and the Treasures of the Arabic Language. Center for Research in Astronomy, Astrophysics and Geophysics (CRAG): Researches in the fields of astronomy, astrophysics and geophysics. Center for Scientific and Technical Research in Welding and Control (C.S.C): Control and development of welding, control and cathodic protection techniques from the most common to the most modern. Research Center for Valorization of Hydrocarbons and Derivatives (C.E.R.H.Y.D): Development of research programs for the hydrocarbon processing industry, mainly in refining, petrochemicals, plastics and elastomers, fertilizers and plant protection products. National Center for Applied Research in Seismology (CGS): Conduct research in the areas of seismic engineering, geology, seismic microzoning, gear station, materials technology, soil mechanics and structural dynamics. Center for Technical Studies (C.E.T): Development of new telecommunications techniques. 572 Website op.cit. visited on website visited on

209Chapter IV: Application to the Algerian SME Research Center for Terrestrial Biological Resources (C.R.B.T): carrying out research work in plant ecology. Center for Studies and Research in Professions and Qualifications (C.E.R.P.Q): Conduct research on qualifications through the various educational methods and their respective outcomes. National Center for Studies and Planning Analysis (C.N.E.A.P): Conducts research on economic theory, energy economics, business administration, foreign trade, demography and family planning. Cost and Productivity Research Center (C.R.C.P): Conduct cost and productivity research to improve, analyze productivity and identify excessive cost phenomena. National Center for the Observation of Foreign Markets and Trade Transactions (C.N.O.M.E.T.C): promoting the emergence of the most effective forms and methods of intervention by public companies in foreign markets. National Center for Historical Studies (C.N.E.H): promoting and managing research on the history of Algeria, the Maghreb, the Arab world and Africa. National Center for Studies, Applied Research and Works of Art (C.N.E.R.A.T.A): Conducting studies and applied research to provide design and manufacturing services with the aim of ensuring the integration of the national style in public buildings. National Center for Construction Engineering (C.N.I.C): Animation of construction processes. National Center for Applied Research Studies in Urban Planning (C.N.E.R.U): Research to improve urban planning practices. National Center for Animation and Information Processing in the Construction Industry (C.N.A.T): Development of new IT services for the construction industry. B. Creation of the Algerian National Institute of Industrial Property. The work on industrial property was carried out by the Bureau for Standardization and Industrial Property (ONPI). With the 1998 reforms, it was split into two bodies: IANOR, responsible for standardization, and INAPI, responsible for the protection of industrial property rights. INAPI implements the national directive on industrial property rights and in particular ensures the protection of moral rights. In addition, it is able to conduct surveys with companies to identify possible innovations. INAPI has already conducted a survey among 26 companies that are considered reliable. Through this research, 244 innovations were identified, distributed as follows: Table N 29: Types of innovations listed by INAPI Type of innovation Number of innovations New solution to a technical problem 50 improvement or rationalization of an existing product in the company 52 improvement or rationalization of an existing process in the company 38 innovation of a product that does not exist in the company 75 innovation of a process that does not exist in the company

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210Chapter IV: Application to Algerian SMEs Other type of specific innovation 8 Total 244 Source: Ministry of Industry and Restructuring, Development of Technological Innovations in Algeria November 1998 cited by Khelfaoui.H, op cit, 2001 According to the 2010 statistics, a total number of applications for 3625 national trademark applications, i.e. H. a development of 0.47% compared to last year. In terms of design applications during the annual filing in H. a decrease of 26.51% compared to 2010 last year. Based on IRSM, the number of registered files is 377, an increase of about 0.80%. For its part, the Trademark Division registered a total of 4,893 applications filed in various states (trademarks, renewals, designs, IRSM), with an average of applications per month. The table below shows the results of trademark, design and IRSM applications over the past three years. Table no. 30: Development of deposits over the years States National brands Models I.R.S.M Source: INAPI statistics available on the website The graph below shows us the development as follows: Figure N 27: Development of deposits over the years Source: INAPI Statistics available On Site The trademark department experienced a increase in national trademark applications by 3,625 applications. According to the same source, we note that April is the most profitable month with 398 files, which is 10.97% of the annual volume. On the other hand, the month of September is the month with the least activity, with only 242 submitted applications or 6.67%. Figure N 28: Application for national trademarks 207

211Chapter IV: Applications from Algerian SMEs Source: INAPI statistics available on the website The classification of national trademark applications by country in 2010 showed that the total percentage from several countries is 68%, which is shown in the following table: Table N 31 : National trademark applications by country N countries Number of applications 1 USA France Turkey 94 4 Great Britain 93 5 China 83 6 Tunisia 81 7 Japan 79 8 South Korea 68 9 Switzerland United Arab Emirates 60 Source: INAPI statistics available on page The table shows that local deposits accounted for more than half of total deposits in 2010. The United States is also the first foreign country to place deposits in Algeria this year with 263 deposits, representing an interest rate of 7.25%; It is followed by France with 134 and Turkey with 94. The renewal applications submitted this year are acceptable, amounting to a total of 661, of which 253 are exclusively of Algerian origin, a large number of which were submitted in favor of citizens of the United States or 111 represents a percentage of %. See the table on 208 for details of the renewals

212Chapter IV: Application for Algerian SMEs Table N 32: Extensions of files in 2010 by country N Countries Number of applications 1 USA Japan 58 3 Great Britain 50 4 France 33 5 Switzerland 26 6 Spain 12 7 Lebanon 12 8 Germany 10 9 United Arab Emirates Emirates 9 10 Sweden 9 11 Turkey 9 Source: INAPI statistics available locally It turns out that local extensions account for almost half of the submitted files, i.e. H. %. This is 408 for international innovations. Actions for This year, the confirmations from the national trademark files are positive. The results reached a total of 1799, including 726 from only the dossiers submitted in 2007, representing the majority of the dossiers processed. The details are shown in the following table: Table N 33: Registrations of national trademark files in 2010 Year Number of registered files Total 1799 Source: INAPI statistics available on the website The table is schematic as follows and shows the number of confirmed national trademark files during the year

213Information Retirement Error correction Official transcript IRB Examine patents granted in issue management Supplementary certificates PCT route Non-residents Chapter IV: Application for Algerian SMEs Figure N 29: National trademark files confirmed in 2010 Source: INAPI statistics available on site with affected patents INAPI- patents. the statistics for the year 2010 as follows: Table N 34: Summary of the various operations in connection with patents and patent applications in 2010 Application Classic route Overall processing of applications January February March April May June July August September October November December General source: INAPI - Statistics available on site 210

214Chapter IV: Application to Algerian SMEs Table N 35: Technical area of ‚Äč‚Äčinventions 2010 Non-residents total A and C Health, pharmacy A Daily necessities B Industrial engineering, transport C Chemistry, metallurgy D Textiles, paper E Construction Stationary F Processing, lighting, heating, armament, explosive G Physics H Electricity Total source: INAPI statistics available on the website 2010, of which only 77 declarations are of national origin, which means 9.5% of the total and the rest are of foreign origin, these situations show the weakness of national capacity for innovation and ingenuity and reflects the weakness of R&D efforts at the national level. The origin of these foreign patent applications is shown in the table below. Table No. 37: Top ten countries by notifications in 2010. Source: INAPI statistics available on the website. N Country of origin Number of applications 1 France USA Germany 82 4 China 79 5 Algeria 77 6 Japan 77 7 Great Britain 48 8 Ireland 28 9 Italy Spain 22 France takes first place with 133 registered patents, followed by the USA with 126 patents. To this we can say that despite all the state investments as part of the five-year laws of 1998, Algeria only manages to produce between 30 and 94 resident patents annually, which is insufficient compared to other neighboring countries and other countries. Other developed countries such as: - Morocco, which produces between 97 and 178 resident patents annually; - Egypt, which produces between 382 and 618 resident patents annually; - France, which generates patents annually between 19 and 19 inhabitants; - Japan annually produces intermediate and resident patents. 211

215Chapter IV: Filing for Algerian SMEs Patent applications by residents Algeria Morocco Egypt France Japan Total Table 37: Patent applications by residents in Algeria from 1998 to 2010 compared to other countries Source: Table based on WIPO statistics available on the website. The poor performance observed in the patent application is not related to the Algerian inventor, as Ammar Hocine explains, but is due to the lack of a true national innovation system that allows the emergence of these geniuses. 574 According to Christopher Freeman, a national innovation system is based on three complementary phases. First, the full adoption of imported technologies. Second, their adaptation to local conditions. Thirdly, its improvement and thus its gradual renewal575. Such a system requires the existence of good reception, dissemination and follow-up structures as well as a network of very strong interactions. As A. Djeflat points out, a national innovation system does not mean that institutions stand side by side, but that it is a highly coordinated process in which all actors involved play a clearly defined role and all follow the same logic. believes that the national innovation system consists of institutional actors directly involved in ministries such as business, SMEs and sector ministries such as agriculture, entrepreneurs, research centers, universities and all ANVREDET agencies for the promotion of gender equality. This brief summary of the most important measures to stimulate innovation shows that the public sector or the private sector invests too little in research. This situation is also due to the weak financial situation of the companies, which therefore cannot bear the research costs, and the lack of a market to provide risk capital, not to mention the lack of information about the risks. technological developments that these companies blame on the incompetence of their managers. 574 A. Hocine, op.cit, P C. Freeman quoted by S.Oukil.Mohamed, "Economy and Management of Technological Innovation", OPU, Algiers, P Interview of Malah Farah with Abdelkader Djeflat: "In eight years, Algeria would be innovative companies,‚ÄĚ 20 June 2013, 212

216Chapter IV: Application to Algerian SMEs 2. The public enterprise: innovation or other priorities? Innovation is an expensive and risky investment for the company, but also a guarantee of sustainability and performance. The Algerian public enterprise, long the instrument of the state to achieve socio-economic goals, could or could not focus its efforts on creativity and innovation. The reasons for such a failure are not easy to explain given the complexity of the planning period. To understand the obstacles of the socialist era in terms of innovation, we propose to read the characteristics that prevailed in public enterprises and then raise the issue of technology transfer and technology dependence, a phenomenon whose factors cannot be separated, hindering technological innovation. Finally, we discuss the innovation capacity of the public sector. Disadvantages of running and managing public enterprises The public industrial enterprise has been the subject of numerous commentaries and studies highlighting its strengths and weaknesses. The reasons for the inefficiencies that characterize the Algerian economy in general and the economy in particular are many and complex. They are often interpreted differently by analysts and observers. For our part, we would like to remind you of some negative features that have affected the limited company's efficiency. Ugly. Weak Investment Realization Rate: During the planning period, Algeria's accumulation rate is considered one of the highest in the world, rising from 27% in 1967 to 41% in 1970 to reach 60% in 1978, remaining very low at 578. F .eg , the economic realization rate 578 was rarely more than 50% in the industry. The average investment rate in Algeria was 43.6% in the reporting period, 35.2% in the reporting period and 31% in the reporting period. But what could attract attention, according to Benissad, is that it is the economic infrastructure sector (roads, dams) that, in addition to prestige operations (beautification of cities), absorbs the bulk of investment budgets at the expense of production branches. 579.b. Excessive indebtedness of listed companies Given the nature of the investments made in Algeria since the late 1960s, the process of internalization has led to indebtedness of listed companies. The overdraft of all 16 non-hydrocarbon industrial enterprises increased from 4 billion to more than 12 billion DA between 1973 and 1973, accounting for 94% of the country's total gross domestic product. In the same year, the companies' interest was DKK 1.5 billion. DA or 12.5% ‚Äč‚Äčof their overdrafts. 577 Ait Atmane Foudil, "Analysis of the determinants of innovation in the Algerian economy: case of the agri-food sector of Bejaia", MA thesis in economics, Option Economic Dynamics, Local Development and Territories, Abderahmane Mira Bejaia University, 2011, P Bouyakoub. A, "The Management Crisis in Public Industrial Enterprises", CREAD Notebook No. 16, Q4 1088, P Benissad H, "Economic Reform in Algeria (or the Unspeakable Structural Adjustment), OPU, 1991, p. 13 213

217Chapter IV: Application to Algerian SMEs that have reached maturity and, in addition, have repaid only 3% of their debt on December 31, 1981 580. c. Financial imbalance in public enterprises If the principle of financial equilibrium is considered the main rule for the correct functioning of the enterprise , the Algerian public enterprise was an exception. In the 1970s, all industrial companies, with the exception of SONATRACH, had 581 losses. In 1973, accumulated losses amounted to 8% of total sales. This rate increases to 12%. It should be noted that the deficits of the public industrial companies have increased so that these companies can no longer compensate. For most of these companies, working capital and cash flow became negative by 582 from 1973. The company then became a single place to record the financial flows generated by its activities, which, however, balance each other due to external mechanisms. D. Financial embezzlement If there is one phenomenon that constantly plagues the public sector in Algeria, it is financial embezzlement and corruption. Since the 1980s, authorities have publicly exposed numerous cases of misappropriation of public funds in public enterprises. e. Cultural and behavioral inertia Several observers agree that the most thorny and important task is to break with bad traditions and create new behaviour. But behavioral and cultural inertia is deeply rooted in the traditions of the Algerian economy. Since the 1980s, Lamiri A has noted that Algerian business has an archaic management system that is more than 50 years behind developing countries in refining the smallest details to transform Algerian companies from resource-depleting entities to value-creating structures. The joint stock company developed in a political environment that completely distracted it from its economic mission. The lack of rationality in the hiring and management of human resources has led to a phenomenon of anarchist recruitment, where subjective criteria (party or trade union membership) have become the rules for recruiting and selecting employees and managers. 584. The trivialization of management and the displacement of leaders by administrative and political appointments, as well as the lack of an evaluation and development system, are the main factors that guarantee a failure in any economic policy. The public enterprise was not about efficiency, but about profitability; either dismissed as insignificant to the public sector or used to somehow denote that sector's 'underperformance' Bouyacoub.A, Opcit, P Bencheikh, Opcit, P Benissad.H, Opcit, P Lamiri A , Opcit, P Nehal N , "Public Enterprise Reform and New Environment", CREAD Notebook N 39, Q1 1997, P Bouyacoub A, "Profitability in the Public Sector", CREAD Notebook N 11, Q3 1987, P

218Chapter IV: Application to Algerian SMEs f Spread of bureaucracy and bureaucratization Bureaucratization has affected all public structures. It manifests itself in many forms; Increase in administrative staff due to the emergence of a very large number of administrative and coordinating bodies (state staff, parties, various administrations, etc.), necessitated by the nature of the relations between economic actors 586 . Benissad also pointed out that the implementation of the planner's economic decisions depended on a bureaucratic, rigid dictatorial management system that entailed social costs and considerable waste. 587. Bureaucracy, which remains widespread in Algeria, is a major obstacle to development 2.2. Technology imports and technology dependence The massive import of heavy technology is presented in the eyes of the Algerian authorities as a necessary step to start the rapid development. Algeria's targeted efforts to create the conditions for extensive and independent industrial reproduction have been visible since the end of the year. The principles of the Algerian policy of technological independence and technology transfer are explained in the 1976 charter, which assumes "a new and technological new". economic independence and technological dominance were materialized by massive purchases of industrial plants and ready-made factories, but unfortunately the calculation was not carried out. These costs are paid dearly by public companies, increasingly by foreign companies that become dependent. a- Algeria's technological dependence Technological dependence is not a choice, but an inherent feature of the development plan of the socialist economy. It is important to emphasize that Algeria has tried to improve its economic situation through an industrial strategy aimed at providing the national economy with reliable resources for self-reproduction. During the three plans ( , , and ), the data for all industrial sectors indicate a more or less pronounced trend towards a greater amount of technology import activity. Potential domino effects (steel, mechanical, petrochemical, etc.) in combination with the choice of relatively mechanized techniques in all industries are justified by the need to quickly lay the technical foundation for an egocentric development. From such a perspective, the massive import of technology cannot only aim to speed up the construction of industrial complexes. At the same time, conditions must be created for the spread of new production methods in all sectors of the economy and ultimately for the local generation of processes and installations. Djeflat.A speaks of endogenous technological accumulation in many writings to explain how technological mastery takes shape. For this author, "the ultimate stage of endogenous technological development is reached when the national scientific and technical capacity allows the production of technology in an autonomous way and in accordance with the criteria and standards that 586 Debboub Y, "the new economic mechanism in Algeria ', is decided. , OPU, 2000, P Benissad H, Opcit, P Temmar H, "Independent development strategy, the case of Algeria: an assessment", OPU, 1983, P Yachir F, "Technology and industrialization in Africa", OPU, 1983, p.

219Chapter IV: Practical application to Algerian SMEs, i.e. when there is real national scientific and technical potential‚ÄĚ 590. Furthermore, the same author adds that technological innovation is a final stage and an undeniable manifestation of an endogenous technological accumulation 591 This means that technological mastery at the level of public enterprises is an important development lever , prior to the stage of creativity and technological innovation. Economic independence is defined as: "the ability to master imported industrial technology, organize its distribution and, on this basis, build its own technological capacity" 592. This independence must be ensured in Algeria by using the scope of technology transfer to imported technology as a whole with a national base in education and vocational training, would lead to the process of technology accumulation and ultimately economic independence). Temmar.H speaks of a "technological vicious circle" to describe the consequences of the aforementioned technology transfer model. He concludes that after 15 years of industrial effort, there are no signs that independence can be achieved in the near future. Since the Algerian economy is caught in a situation where every movement goes in one direction or another, this process cannot be carried out without a sustained effort on the part of development actors, in this case public companies. In other words: For Yachir F The increasing predominance of finished and finished products has led to a contradiction between the short-term assimilation of production processes and the medium- and long-term development of local technological resources. It is also related to the nature of the contracts and the development of forms of technology import and lack of technology transfer, which means that the establishment of industrial complexes and control of their operation does not necessarily lead to the establishment of a system. local capacity for dissemination and production of techniques 594. b- Barriers to technology transfer and technology accumulation If technology dependence is defined by: inability to use, maintain, reproduce and invent the means of production and forms of organization in the long term, is It is clear that the causes of a such malfunctions are diverse and complex. If there are clear answers today, it is primarily thanks to two authors who took the trouble to clarify the question in their publications after Djeflat.A (endogenous technology accumulation, technology policy) 595 and after Yachir.F (technical dissemination) innovations and the the role of institutions, technology and industrialization). When it comes to financial independence, we prefer to talk about three spheres: the sphere of the internal environment of the company, the sphere of the national external environment and the sphere of the international environment. If we prefer to start with the area of ‚Äč‚Äčthe company's internal environment, we must recognize the shortcomings of the quarter 1991, P Djeflat A, "Economic reforms and new challenges of endogenous technological accumulation in Algeria: an empirical reading", CREAD Notebooks No. 33, 1. quarter 1993, P Temmar H, Independent Development Strategy, The Case of Algeria: An Assessment", OPU, 1983, P Temmar H, Opcit, P Yachir F, "Technology and Industrialization in Africa", OPU, 1983, P Djeflat A. , Opcit, P Yachir. F, Opcit, P65 216

220Chapter IV: The application among Algerian SMEs clashed with the imported technology and hindered the process of active implementation of the technology. Among the many problems facing the public enterprise, we mention the following597: - Inadequate maintenance and repair - Problems with supply (used raw materials, semi-finished products) and distribution - Irrational management, lack of planning, bureaucracy and clumsiness in commercial and financial institutions - Lack of supervision and vocational training, young staff and too little work experience. - A workforce that is poorly adapted to the demands of technology: absenteeism, lack of discipline. When we talk about a national environment supposedly prepared for the realization of technology transfer, we are talking about the organization of technology transfer in Algeria. As early as 1973, a working group under the Ministry of Industry presented a number of proposals for organizing the technological process598: - creation of research, development and engineering capacity - for housing and public works, national standards should be set for certain materials and certain products - the global contracts should providing for the substitution, where possible, of elements of foreign technology with elements of local technology, and the introduction of local production standards - resources and training programs were to be created in the enterprises and at the industry level ministries with the aim of training managers to become leaders. Things did not go as we wanted because the conditions before the technology transfer was organized were not sufficient. According to some authors, the limitations of Algeria's education and training policies constituted a handicap in control and technological reproduction. Others see this as a legal imitation of creativity and technology transfer, since the 1966 legislation on inventors' certificates (socialist-inspired design). and invention patents (liberal-inspired point of view) from a protection of industrial property rights do not fit into the general legal climate of the time, which is strongly determined by the superstructure of historical, economic, political and social factors. A system of dominance because the skills for technological innovation and creativity were completely foreign to them. Djeflat points out that direct investors are known to have very little outsourcing of R&D, the research and development function, and therefore argues that this is protected at the corporate and parent company level. Development in Algeria", CREAD Notebooks No. 3, Q3 1984, P Argyris C., Schon DA, "Organizational Learning: Theory, Methods and Practice", De Boech, 1996, P. Hamidi H., "Economic Reform and Industrial Property ", OPU, 1993, P. Djeflat A., "Economic Reforms and New Challenges of Endogenous Technological Accumulation in Algeria: An Empirical Reading", CREAD Notebooks No. 33, Q1 1993, p.

221Chapter IV: Application for foreign SME investors from Algeria in developing countries. The prospects for technological innovation from foreign direct investment should therefore be minimized as a technology monopoly continues to prevail. The powers of the Algerian partner to negotiate R&D outsourcing, the incentive to organize R&D within the partnership and to outsource to the local level are often very weak. In sum, the out-of-the-box acquisitions were made without technological input, and Algeria's dependence on imported technology was reflected internally by a limited or non-existent rate of invention and technological innovation relative to the amount of investment undertaken. 2.3. Innovative capacities in the public sector The problem of innovation in the Algerian economy is not new, because if we look back a little in the economic history of Algeria, we see that the public enterprise actually has a place where R&D can work. in its structure since the late 1970s, although the effort was short-lived. As we have already explained, innovation was not the main concern of the Algerian state-owned company, as the problems lay elsewhere; the strategy implemented during the planning period was based on the assessment of the available raw materials, both local and national soil, and their utilization to generate spillover effects to the other sectors. For this reason, research and innovation were by no means a major concern of the company. However, it should be noted that research activities were not included to meet a need for improvement or development, which meant that research and development could not be set up as a tool for carrying out research work. a- The emergence of R&D in public structures In the early 1980s, the R&D function in most companies began to form in structures called the Department of Study and Development (DED) 601. These units then developed differently in each company . The failure of the organic restructuring measures, but especially the economic and social crisis, caused the authorities in 1988 to start the process of strengthening the companies, and within this framework, the public company was prompted to set its own goals and ways and means for their realization . to be defined. During this period, the R&D position began to appear on organizational charts of publicly traded companies. Several cases illustrate the situation for research and development in public companies; In 1985, SONALGAZ established a Study and Research Unit (UER) engaged in applied research in renewable energy. In the same year, SAIDAL established its Drug and Pharmaceutical Engineering Research Unit (URMTP) and ENIEM established a Development and Industrial Division (DDI) to investigate the technical and commercial feasibility conditions for installing new plants. In fact, we must point out that before the SAIDAL company was founded in 1977, the leading representatives of the pharmaceutical industry established a development and research laboratory (LDR), whose main task was the formulation and implementation of ointments and tablets - on site feasibility studies for certain licensed drugs. After the creation of SAIDAL in 1985, it enjoyed the benefit of a Medicine and Pharmaceutical Techniques Research Unit (URMTP), which was transformed in 1999 into a 601 Ouchalal H, Khelfaoui H & Ferfera Y, "Situation de la R&D dans l'industrie Algerian". , December

222Chapter IV: Application to the Algeria Research and Development Center for SMEs (CRD) to adapt to the changes in the pharmaceutical market. Just because the R&D function has been on the org charts of listed companies since the early 1980s does not mean it is valued. A study of listed companies SONELGAZ, SAIDAL and ENIEM showed that although R&D activities formally appear to benefit from prominence in companies because they are prominent in organizational charts, the reality of research is often far removed from administrative status. The same study concludes that it is almost universally impossible to translate research efforts into development efforts, and that research and development has failed to establish itself as a performance tool or solution to technological problems 602. Abdelhadi emphasizes that the research and development function is not could not do properly applied in the public company's activities, is also due to the fact that the goals he was assigned did not correspond to his status. The R&D function of the limited company pursues a goal that is as precise as it is simple: to save currency 603. It is therefore necessary to avoid the import of simple technological products. Other aspects of R&D are neglected because there is little discretion and the company's policy towards R&D managers does not leave room for the promotion, training or release of researchers. Also, the sources of information are at a very low level, which leads to the isolation of researchers from the rest of the world. b- Attempts to develop innovation activities. If there is one public company that has made an effort to promote invention and innovation within its business, it is the SIDER company. From 1991, a number of decisions were made by the SIDER management in favor of inventions and innovations in the company: the first two decisions were signed on the same day, February 18, 1991, the third took place on February 11. August 1991 The decisions taken establish several purposes, namely the inventor's right in the company, the implementation of the invention in the company, the remuneration for the innovation and the invention remuneration. However, the decisions are inherently limited, as they did not concern the release of the employees' creative activity and the release of the enterprise's initiative and creativity. All in all, the decisions in question do not remove the internal obstacles to the development of the invention, the right to innovation does not arise there. The decisions contain certain anomalies which negatively affect the development of innovations in the company. Khelfaoui H also reiterates that if there is a pioneering company looking for new ways of working and acquiring knowledge, chances are it is ONE SIDER. As early as 1983, it undertook to create the necessary conditions for the development of "quality circles"605. However, the effort was short. When Khelfaoui discusses the likely causes of failure, he evokes resistance to change and hesitation. 602 Khelfaoui H., "Scientific research in Algeria: between local demands and international trends", CREAD Notebook No. 45, Q2 2008, P Si Abdelhadi A., "Automation technology and its transfer to Algeria", Notebooks du CREAD No. 25 , Q1 1991, P. Hamidi H., Opcit, P. Khelfaoui H., "New Forms of Knowledge Acquisition: The Algerian Enterprise Faces the Challenge of Science", CREAD Books No. 49, Q3 1999, p

223Chapter IV: Application in Algerian SMEs When we talk about good initiatives, one more interesting experience can be mentioned. This is the event organized by a consortium of public and private companies from northeastern Algeria. In 1994, 20 companies, including five major listed companies, formed a collective technology monitoring organization, the Eastern Regional Economic Observatory (OREE). This body must be both an instrument for managing the (inter)national business climate and an instrument for intensifying exchange and cooperation opportunities between these companies. OREE had two main functions: collection of scientific and technical information and analysis of the data thus collected. After operating for a few years, OREE disbanded, probably due to the slowness associated with the operating system and its environment. Another interesting experience is the company Nationale DES Systèmes Informatique (ENSI). The rapid development of its product forced this company to engage early in technological surveillance. This concern led to the creation of a Technology Watch Unit, whose main role was to monitor the development of information technology and help ensure visibility of the company's medium- and long-term prospects for technological development. In summary, despite the corporate autonomy introduced in 1988, which allowed the public company to define its own goals and the ways and means to achieve them, there was no incentive for the companies to continue the momentum. d innovation and change; On the contrary: the deindustrialization that had already started in the mid-1980s and the transition to a market economy made the company implement survival plans and even neglect research and economic development. delicate; There were actually other priorities. 3. Private companies face the innovation challenge Despite the expansion of the public sector in Algeria for more than two decades, it has shown its limitations and inspired the government to the need for deep economic reforms. The economic reforms implemented since 1988 have removed almost all administrative and financial obstacles that hindered the development of the private sector in the context of the planned economy. They established entrepreneurial freedom in all areas of economic activity and created a number of incentives for the development of private SMEs/SMIs in Algeria. Since the 1980s, the centrally planned economy has been questioned almost everywhere. The public sector in Algeria is characterized by several weaknesses that are always widespread at all levels: debt, financial imbalances, chronic liquidity shortages, non-compliance with administrative rules and techniques in accounting, planning, statistics, marketing, almost universal lack of a real Control, arbitrary creation of certain economic entities. The implementation of reforms in Algeria with a view to a transition to a market economy has not been smooth. The emergence of a relatively dynamic private sector did not prevent certain disadvantages typical of socialist economy from being repeated. At the corporate level, many blockades have been lifted, but continued efforts are needed to revive the Algerian economy. In order for private companies to survive and thrive in the context of globalization, they must use all the energy, opportunities and resources at their disposal as efficiently as possible. This requires a high degree of dynamism, skill, creativity and innovation. The Algerian private enterprise today seems to be aware of the need to innovate its activities and products, but the fact is that it lacks the resources and the right environment. 220

224Chapter IV: Application to Algerian SMEs 3.1. Market economy and private entrepreneurship In Algeria, private entrepreneurship is mainly associated with a market economy or an economy in transition. The principles of private entrepreneurship date back to the late 1980s, when a law was introduced that limited local private investment, with the aim of increasing labor capacity, encouraging import substitution and promoting complementarity between the private and public sectors. the autonomy of public enterprises and the distance that led to the limit of local private investment. The emergence of the private sector has been timid since 606: - Far from having an industrial production mindset, the local entrepreneur is only interested in investing in industries where the period of capital recovery is short. - Approved investments encounter complex problems in acquiring land for settlement by the municipalities - Commercial banks refuse to provide investment or business loans due to approval decisions, the local entrepreneur largely resorts to self-financing. Since 1989, the market economy in Algeria has been based on the reform of the public enterprise. The economic reforms initially focused on public enterprise (change in legal status, organization, operation, relations with the public sector). . state and its environment). The goal was to make the economic system more efficient with this privatization movement and not to overtly create a transition to a market economy607. However, the current situation in Algeria is characterized by the development of a market economy, which corresponds to market logic. . The economic liberalization movement in Algeria has enabled the development of an important network of private SMEs. In fact, the liberalization of this sector of the economy has enabled the emergence of a large number of entrepreneurs qualified as "new" 608 compared to those that arose in the managed economy (70 years). New features and differences emerge, highlighting the emergence of a new category of economic actors emerging in an economy where conflicting mechanisms related to the rules of the managed economy (tariff protection, monopolies, informal economy and practices) and the market coexist Economy (freedom) business, price freedom, goods and capital movements, etc.). Rejecting the state in its restrictive aspects (taxation, financial regulation, business owners competing with the private sector), these new entrepreneurs demand more from the state to protect them from the disadvantages and vagaries of the market economy. Innovation Since there are no statistics on innovation in Algeria, we cannot obtain precise information on the status of innovation activities in private companies. 606 Benissad H, Opcit, P Bouyacoub A, "New Entrepreneurs in Algeria in a Transition Period: The Transnational Dimension", CREAD Notebooks No. 40, Q2 1997, P Bouyacoub A, Opcit, P Bedrani.S, New Entrepreneurs in the Transition to a Market Economy: Rural Entrepreneurs,‚ÄĚ CREAD Notebooks No. 40, Q2 1997, p.

225Chapter IV: Application to the Algerian SME surveys conducted by university researchers in Algerian private companies. A 2003 World Bank report analyzed the Algerian private sector as follows: "Private companies are generally family businesses run by the founder. They are typically undercapitalized and heavily indebted. Their management methods are outdated, especially in finance, strategy, marketing, and human resources. Business transfers , mergers and consolidations are rare. Acquisitions by foreign companies are still very limited 610. According to a 2000 study of SMEs in western Algeria, intra-firm blockades remain. Intangible investments and the search for information are still modest. This study shows, that almost half of the companies surveyed (44.32%) indicate that they have not made any truly innovative investments (purchase of patents and operating licenses, training costs), while only 13.64% of companies have invested in this niche611. Another business survey conducted on a sample of 612 SMEs shows that there are non-innovative SMEs in Algeria, but they clearly have a desire to develop further. These companies face obstacles in carrying out research and development activities, mainly due to the high costs associated with these types of activities. Given the importance of R&D activities for innovation and the limited resources that Algerian SMEs can devote to R&D, business leaders lament the problem of access to finance. The managers of SMEs interviewed during the study indicated that the government does not provide financial support to support innovation projects and that it does not make sufficient efforts to control, support and facilitate. commercial) to stimulate innovation. However, the same research confirms that innovations are present in some Algerian SMEs. These companies integrate innovation as a competitive factor in their approach, especially when exporting their products abroad (especially to North Africa and Europe). Despite the funding constraints that weigh on innovation, these SMEs use their own resources to finance research and development and make innovation-related investments. These firms have the necessary skills and their managers use (usually) weak signaling networks to organize technological and competitive oversight and support the innovation process. In order to be able to innovate, it is essential that the company has information about what is happening around it. In Algeria, SMEs seem to have limited information about the market and the scientific and technological environment in which they operate, which is not conducive to innovation and technological change. A survey by Djeflat shows that 67% of companies perceive their scientific and technological environment as stable, i.e. subject to changes without notice. This category is more closely related to 610 The World Bank cited in "Minister of Territorial Planning and the Environment, Regional Planning and Sustainable Development Plan for the North-Central Region, Phase Diagnostic Report, 1 February 2005, P Ait Habouche M," Structure". of the demand for intangible investments by SMEs", 2002, P Haudeville B & Bouacida R, "The relationship between technological activity, innovation and growth in Algerian SMEs: an empirical study based on a sample of companies",

226Chapter IV: Application of information research, frequent product changes and development of a marketing strategy for Algerian SMEs. The other 8% are unsure. In detail, only 25% believe that they are sufficiently informed about the innovations taking place in their area, while 72% consider the level of information to be relatively low and insufficient. The remaining 3% consider themselves to be more or less informed. 72% of the companies surveyed believe that they are not sufficiently aware of the innovations in their field. Only 25% of companies consider themselves 613. A study of Bejaia companies, carried out as part of a 614 thesis, concluded that private companies have the potential to develop innovation and learn SMEs. The research also shows that at the company level, innovation processes, if any, are weakly formalized, learning processes are not valued, R&D structures are practically non-existent, technology monitoring is not used, innovation is not integrated into the strategic vision, and the spirit of initiative is rarely observed. The innovations found in these companies are usually incremental and relate much more to routine activities than innovations organized as part of R&D activities. Innovation is not supported or driven by R&D activities, but by information from customers, suppliers and specific organizational units. By highlighting in the same study the factors that block innovation activities, claims are made about the failure of the internal and external organizational and institutional framework. It can be concluded from these studies that Algerian private companies are often characterized by a lack of innovation capacity. There are several obstacles that stand in the way of the development of innovation projects in these companies. Most small businesses have limited financial resources as banks in Algeria do not provide sufficient credit to SMEs. Another obstacle to the development of innovations is the lack of information about technological developments. There is a lack of mastery of technologies and new knowledge to support the innovation process. In fact, the internal capacity of Algerian SMEs (researchers, technicians, production and marketing agents) is weak. 4. Obstacles faced by SMEs in Algeria. The inherent difficulties of SMEs (financial, innovation, productivity and competitiveness) are even more serious in a growing and developing economy where private initiatives are not sufficiently valued and supported. The weaknesses of Algerian SMEs certainly stem from this situation and their necessary modernization in line with international management and leadership standards and norms. Several barriers to investment can appear, we cite in particular 615: 613 Djeflat A, "The new needs of SMEs in a knowledge economy, the case of Maghreb companies", 21 August Arabi Kheloudja, "Institutional and organizational barriers to the dynamics of innovation through learning in Algeria: the case of the Bejaia region", PhD thesis in economics, Tizi Ouzou University, 2007, P Marzouk Farida, "SMEs and Competitiveness in Algeria", Bouira University, P07, available on the website: 223

227Chapter IV: Application for Algerian SMEs - Difficulties in accessing land due to complexity and cumbersome administrative procedures and lack of transparency (local administration, land, cumbersome administrative procedures). - Difficulties in gaining access to the various means of financing and the various options for credit and guarantees (the slowness of bank financing, the banks do not know their customers well enough and therefore do not assess the companies' solvency). - There is no mastery of banking techniques, and administrative corruption is on the rise. - Significant reduction of a plan to monitor, monitor, support and manage the creation of SMEs/SMIs. A study carried out by the ANIMA network in 2005 clearly highlighted the strengths and weaknesses of innovation, as well as the opportunities and threats for the countries of the MEDA region, to which Algeria belongs 616. Strengths: - Abundant natural resources of oil, gas and chemicals - Strong commitment to Euro- The Mediterranean Partnership based on free trade, especially through the AMU (Arab Maghreb Union) and more recently the creation of the Arab Free Trade Area. (Zale) - Positive growth prospects and high potential for sectors such as tourism - Improved conditions for receiving foreign direct investment in terms of the availability of service sectors, relatively low salaries for engineers, etc. - The beginning of a structured process of national development programs related to association agreement. (Association Agreements with the European Union of 2005, allowing for the creation of a free trade area by 2017) - The presence of administrative reform programs, programs for SMEs, support for innovations (risk for business incubators and capital funds) - Progress in the industry development of the main economic sectors: coasts, landscapes, historical and cultural heritage, good climate. - The existence of powerful public and private companies such as Sa√Įdal, Sider, Cevital, etc., as well as a large network of SMEs that are growing rapidly 617. According to Mohamed Ta√Įbi, general manager of ANVREDET, there are some SMEs in Algeria whose product must be will be improved. The time zone is equal or close to that of Europe. B. Weaknesses: - Sophisticated public sector; - High dependence on exports of primary products or other activities with low added value (agriculture, oil, gas and chemical products). - High bureaucracy; 616 H. Kendel, op.cit. P: A. Djeflat quoted by M. Atmani, op.cit. 618 Alg√©rie Presse Service, "The share of Algerian patents filed with INAPI does not exceed 20%", available at site 224

228Chapter IV: Application to Algerian SMEs ‚Äď Lack of corporate culture; - Low private investment; - Low economic diversification. - Low public investment in science and R&D. - Low staff mobility within higher education and research; - Lack of corporate culture and entrepreneurship - Fragmentation of existing R&D infrastructure - Low level of innovation management skills in the public and private sectors; - Gain admission to higher education. - Negligible investments in the private sector in research and development. versus opportunities: - Increased trade through the creation of a Euro-Mediterranean Free Trade Area. -Emerge in the value chain within oil and gas, chemicals, agricultural production, tourism and services. - Take advantage of the ongoing restructuring of European industry (relocation) - Take advantage of the tendency of developed countries to move intensive service tasks to countries with low wages and high skills (call center, back office work, communication, design, development and even basic research). ). - Exploitation of the Mediterranean diaspora in Europe and the rest of the world. D. Threats: -Political instability and religious fundamentalism -Social unrest due to high levels of poverty and unemployment and the perceived wealth gap between higher and lower income groups. - Lack of accumulation of strategic capacity in planning, execution and evaluation of programmes. - Lack of integration of human resource management, research and development and innovation with the needs of society and the economy. - Lack of a demand-driven R&D culture. - Inability to find the right balance between short-term priorities and long-term challenges. In addition, A.Djeflat has identified some problems that hinder Algerian innovation, such as: B. 619: - Innovation funding in Algeria is mainly public, while funding in developed countries is more of a private matter. - The weak links between the company and the university (4% of the companies in Algeria have links with the university). - Banks are completely excluded from the innovation process because they do not provide sufficient financing methods for the type of innovation, which is a risky investment. 619 A.Djeflat quoted by T.Mehdi, op.cit. 225

229Chapter IV: Application to Algerian SMEs A.Djeflat notes that Algeria lacks the coordination between the various government institutions, private partners and innovative companies to benefit from an effective innovation system. (05) Ingredients are proposed to promote innovation in Algeria 620: The presence of the state, which is always important. In this context, some companies refrain from investing in innovative projects due to unfair competition and total disregard for standardization requirements. For example, the company Soumam-Emballage, which specializes in the production of propylene food bags and respects the product's food standards, faces competitors who offer products at very low prices without meeting the standards, which puts it at a disadvantage 621 implementation of an effective innovation protection strategy. The definition of a technology transfer strategy; Implementation of a cooperation strategy; Responding to business and market needs. In order to stimulate innovation in Algeria, H. Kendel emphasized the need to 622: strengthen the partnership between companies and other actors in the innovation system: the company alone cannot succeed in innovation, since process innovation is a collective process that arises from the interaction between different internal and external actors in the company. Therefore, it is necessary for the Algerian company to cooperate with other companies and other academic, financial, etc. institutions. In this context, Algerian companies should cooperate with other local or foreign companies to promote technology transfer. They must also collaborate with universities to carry out joint research and development projects. In addition, Algerian companies need adequate and sufficient financing. To do this, the state should create special financing programs for innovation and encourage the creation of venture capital companies for the benefit of SMEs and SMEs as well as universities. Training entrepreneurs with the aim of developing an "entrepreneurial spirit": To be successful, you need competent entrepreneurs. However, entrepreneurial spirit is generally lacking in the majority of Algerian managers. To fill this gap, it makes sense to introduce entrepreneurship training modules in Algerian universities to raise students' awareness of the entrepreneurial culture and prepare future entrepreneurs to lead innovative projects. Reducing brain drain by appreciating the benefits of researchers: According to H. Kendel, Algeria can utilize the knowledge of its foreign leaders through two solutions623. The first is to counter the brain drain of its skills, based on: - introducing a "charter for researchers" aimed at improving the career management of researchers; - Development of a framework for the collection and recognition of research results throughout the researchers' careers. 620 ibid P.K. Megherbi, M. Arabi and H. Khelfaoui, op.cit. P H. Kendel, op.cit. pp. H. Kendel, Opcit, P

230Chapter IV: Application to Algerian SMEs - Development of a platform for dialogue between researchers; - Development of centers of excellence for scientific research and creation of a favorable environment for the development of technical innovations and the creation of enterprises. The second solution is to exploit the knowledge of this scientific diaspora without having to try to bring it back physically. To achieve this, Algeria can use ICT to disseminate and benefit from the skills of its scientific diaspora and contribute to the development of the country without necessarily requiring a permanent return. 624. Conclusion After more than thirty years of studies, programs and laws, we still realize that there is no real research strategy in Algeria and scientific creation seems to be pushed into the background. The only scientific activity that exists is in the higher education institutions, although it focuses on traditional scientific fields and not on technologies that are considered key technologies everywhere else. However, this delay is not due to a lack of companies that specialize in the dissemination and utilization of research results and technology transfer. In fact, several organizations have been established with the task of increasing activity in innovation and scientific research and improving the relationship between research and industrial companies. It turned out that these units work separately from each other, and there is no knowledge transfer between them, although they are essentially support and support structures. These shortcomings in the functioning of the scientific research system mean that Algeria remains a major importer of technologies, know-how and even scientific culture. The insufficient number of registered patents, which should also not be overlooked, reinforces the idea that the national capacity in terms of innovation, invention and R&D efforts is still very low, and that the innovations identified rarely take place at the stage of industrial implementation and commercial utilization, showing that there is practically no connection between research and industry. Establishing a public policy to support innovation is very important to facilitate the emergence of the innovation process in SMEs. The financial support for these companies must support investments related to innovation and research efforts. Through relays and support structures, SMEs can also pool knowledge and know-how and facilitate technology transfers to boost the development of innovation projects. 624 Tekfi Saléha, "Survival Innovation and Enterprise Performance, Case of Enterprise CMA Sidi Bel Abbes", PhD Thesis in Economics supervised by Pr Kerzabi Abdellatif, University of Tlemcen, 2012, p.

231Chapter 4: Application to Algerian SMEs Section 1: Research methodology.227 I. Formulation of hypotheses II III. IV Carrying out the study..229 Structure of the questionnaire..232 Presentation of our research committee Section 2: Analysis method..239 I. Presentation of the implemented statistical methodology II III. IV Presentation of the conducted factor analysis PCA..250 Presentation of the confirmatory factor analysis CA Test of the hypotheses 269 Section 3: Discussion of the results...272

232Chapter IV: Application to Algerian SMEs Introduction This chapter aims to present the conceptual framework and methodological approach for this research. The latter is evident to a large extent from the literature review presented in the work's first three chapters. In the first part of this chapter, we present our research methodology and return to the variables whose relationships we will examine later. To do this, we start our literature review by presenting the hypotheses about the factors likely to generate innovation in the SME, as well as a presentation dedicated to the data collection and the characteristics of our sample. Next, we describe the approach implemented to create optimal conditions for testing the research hypotheses. We will then try to present the methodological decisions related to the analysis of the measurement scales and the results of our study. Section 1: Research methodology A synthesis has been made of the most important theoretical and empirical data on innovation in the SME context. This made it possible to establish links between the determinants of driving innovation in medium-sized enterprises. At the end of these chapters, hypotheses were developed about the various factors. This section discusses the research methodology used to test the accepted hypotheses. In particular, the research strategy, the method of data collection, the studied population, the characteristics of the selected sample, the description of the variables related to the different concepts of the research model and the techniques used for data processing are presented. It should also be noted that we relied on questionnaires, interviews and direct observation of inventory to complete the study. Therefore, this fourth chapter discusses the methodological parameters of our research approach, namely the data sources used, the composite sample of SMEs, the data collection performed, the indicators used and the monitoring tool developed. 1- Formulation of the hypotheses All in all, the review of the literature on the main factors that drive innovation has made it possible to put forward some key elements, which are summarized in the elements in the form of the following hypotheses: H1a: The entrepreneur is the initiator or focal point for the innovation process in connection with an SME H1b: The more the entrepreneur is focused on research and development, the greater the chance for innovation H2a: The more skilled employees the company has, the greater capacity to innovate H2b: R.H in the form of employees who are employed in research and development, will promote innovation in SMEs H3a: The availability of financial resources increases the capacity of SMEs to innovate 229

233Chapter IV: Application to Algerian SMEs H3b: The company that allocates a specific budget to R&D tends to be innovative. H4a: The company that works in an integrated manner (partnership) has a great influence on its innovativeness. H4b: External R&D cooperation increases SMEs' willingness to innovate H5: Competitive pressure has a positive effect on SMEs' ability to innovate H6: R&D has a positive effect on SMEs' propensity to innovate. To answer these hypotheses, we propose the following conceptual model; Figure N 30: Conceptual model Entrepreneurs H1b Human skills Partnership H2b H3b H4b H2a H3a H4a R&D H1a H6 INNOVATION Economic opportunities H5 Competitive pressure This model corresponds to the synthesis of our understanding of the state of theoretical and empirical knowledge of the innovation process in the innovation process. of SMEs summarizing all the dimensions explored in this study related to their ability to create innovations. The selection of variables was calculated using a study that collected several previous studies in different countries, 23 in total. From these studies, we highlighted the key factors that drive innovation in the organization and then assigned 10 points to the first variable that the authors of each study considered important. We continued our classification in descending order according to the scale from 10 to 1 (see attached calculation table). We then began to aggregate the scores obtained and identified the top six based on the literature search, which according to most authors are the most important variables: the entrepreneur, the financial capacity, the human skills, partnerships, competitiveness and according to the study we developed. in the third chapter by examining the vulnerability of Algerian SMEs to innovation allows us to consider them as variables that promote the creation of innovative Algerian SMEs. 230

234Chapter IV: Application to Algerian SMEs. Our analysis is based on an exploratory factorial study (ACP), which enables the elucidation of the factorial structure, followed by an examination of the reliability of the internal consistency of the instrument used. Based on the logician IBM SPSS Statistics 20. The second step is dedicated to a confirmatory factorial study (AFC) that allows a decision on the dimensionality of the measurement tools, an assessment of the reliability of the internal consistency and finally an assessment of the convergence. and discriminant validity of the tool measure with the Statistica software. The third step is performed to test the reliability of our hypotheses based on the structural equation method. Having established the conceptual framework and the research hypotheses, we can now move on to choose the methodological approach that will guide this research and allow relevant answers to be given to the questions posed. 2- Conducting the study: Our research initially focused on a sample of 100 industrial companies in the Tlemcen region (western Algeria). However, the number of companies that responded did not reach this target. For this reason, we decided to increase the size of our sample, diversify the scope and go beyond the borders of Tlemcen to reach some companies at this level nationally. In this connection, we focused on a very important pole. More than 100,000 domestic and foreign companies from around forty countries participated in the 47th edition of the Algiers International Fair (FIA), which took place from 28 May to 2 June 2014 at the Palais des Expositions in Algiers. This fair was considered one of the largest business events on the African continent with 600 foreign companies from 37 countries. They are the United States, Argentina, Cuba, Venezuela, Turkey, Germany, France, Portugal, Great Britain, Russia, Poland and the Czech Republic, Japan, China, Vietnam, Malaysia, Indonesia, Senegal and Cameroon. Egypt, Tunisia, Iraq, Palestine, Libya, Kuwait, Jordan and Sudan also participated. About 50 foreign companies from Spain, Italy, India, Iran, South Africa, Belgium, Ukraine, Burkina Faso, Yemen and Mali participated individually in this edition. The USA was the guest of honor at the 47th FIA. 453 Algerian companies took part in the national participation, which are mainly active in the fields of agri-food, services, energy and petrochemicals, electrical and electronic industry, textiles, mechanics, steel and metallurgy, furniture and construction. For our sample, we selected all national companies that participated in this event. The advantage we had was primarily the grouping of different companies from different sectors, but also the presence of managers at their stands. Remember that after several investigations; There are several limitations regarding studies in the organizational setting. The corporate environment is less likely than individual consumers to complete questionnaires. In fact, the policy of the company and the degree of confidentiality of the subjects covered explain the caution of 231

235Chapter IV: Request for Algerian SMEs to participate in surveys. Greer et al list the various factors that increase the response to questionnaires 625. Table N 38: Factors to increase the response to questionnaires Factors Average importance on 100 points Content of the questionnaire Organization conducting the survey Stamped return envelope Privacy, sensitivity of the question 9 , 68 Use of an introductory letter 7.89 Quick response 6.80 Time of survey receipt 6.23 Time required for response 5.01 Follow-up 1.98 Advance announcement 1.69 Other (length, simplicity of question) 1.03 Source: Greer et al., Opciten Given the importance of these factors, we tried to maximize them in order to increase the response to the questionnaire. In general, our research went well, apart from some shortcomings such as: a. The first problem is the attitude of certain economic actors towards scientific research. B. The second problem is related to the novelty and complexity of the subject. vs. Managers were more interested in creating business partnerships. 3- The structure of the questionnaire There are a number of rules that must be respected regarding the structure of the questionnaire (Evrard et al., 2003). The sent questionnaire (attached in Appendix 1) mainly contains questions in the form of 5-point scales. Some additional questions (open and closed) are designed to collect information about the respondent. These questions were placed both at the beginning and at the end of the questionnaire, followed by all questions in the form of limited 5-point scales around six key variables for creating innovation in companies. Namely: the entrepreneur, the financial capacity, the human skills, the partnership, the competitive pressure and finally the research and development. 625 Gherra Sandrine, "Integration of sustainable development in corporate strategy: an explanation through resource and capability theory and stakeholder approach, the cases of the consumer goods sector" Doctoral thesis, University Aix Marseille II,

236Chapter IV: Application to Algerian SMEs We also chose to focus on essential questions and only provide a summary of the interviewed company to avoid the slowness of the field research. We focused on the points that are most important to us: the legal form, the field of activity, the workforce and the year the company was founded. We summarized the variables in our study and the items used for each variable. Table N 39: Number of items per variable Variable Number of items Innovation 38 Entrepreneur 16 Human skills 18 Financial strength 6 Partnership 15 Competitive pressure 3 R&D 5 To avoid missing answers, respondents should answer all questions before moving on to the next follow-up page. Using this method, we were able to obtain 118 usable questionnaires (answers to all questions), which corresponds to a questionnaire response rate of 26.04%. Table N 40: Results of the data collection process Results of the data collection Sent questionnaires 453 Actionable questionnaires 118 This corresponds to a response rate of 26.04%. As we emphasized above, our plug was selected at the Algiers International fair. The latter is considered to be one of the best meeting places between different types of companies, different fields of activity and different sizes, and the most important thing is that more companies can be found nationwide. The purpose of this research is therefore to identify the critical factors that can enable the company to create an innovation. In this context, we will first measure the presence or absence of the key factors of innovation in the sample of SMEs and then analyze the impact of these factors on their innovative capacity. It is thus a study that is both descriptive and explanatory. This research is therefore deductive in nature. Such an approach leads us to prefer a quantitative data collection strategy. 4- Presentation of our sample 233

237Chapter IV: Application to Algerian SMEs Before starting our hypothesis analysis, we present the general characteristics of our sample. 1- Legal status: Valid Table N 41: Ownership type Effective percentage Valid percentage Cumulative percentage Private 0.8 89.8 89.8 Public 12 10.2 10.2 100.0 Total 0.0 100.0 100.0 Source : Our SPSS software. (N=118) As we mentioned, the private sector accounts for almost 90% of our lives. This choice is not random, but depends on the availability of companies, their availability and acceptance and the dynamism felt by these companies. The following diagram illustrates the results obtained. Figure N 31: Representation of the legal position Source: Our elaboration with the software SPSS. (N=118) 2. Legal form: Table N 42: Legal form Percentage of employees Valid percentage Cumulative percentage EURL 43 36.4 36.4 36.4 SARL 61 51.7 51.7 88.1 Valid SNC 2 1, 7 1, 7 101.008 201.7 108. .0 100.0 Source : Our development with SPSS software. (N=118) By presenting the sample according to the criterion of the legal sector, we can take into account the importance of company size in the innovation strategy. Table 234

238Chapter IV: Application to the Algerian SME shows that SARL represents a rate of 51.7%, followed by EURL with a rate of more than 36%. Figure N 32: Legal form Source: Our development with software SPSS. (N=118) 4. Area of ‚Äč‚Äčactivity Table N 43: Area of ‚Äč‚Äčactivity ** Percentage of workforce Valid percentage Cumulative percentage Services 16 13.6 13.6 13.6 BTPH 24 20.3 20.3 33.9 Industrial production 73 61.9 51 . 1.7 97.5 Craft production 2 1.7 1.7 99.2 9.00 1.8.8 100.0 Total .0 100.0 Source: Our elaboration with SPSS software. (N=118) The data in the table shows that the largest sector is industrial production with a percentage of almost 62%, followed by construction with a percentage of more than 20% and finally the tertiary sector with a percentage of more than 13%. reserved by services. This diversity in the investigated area of ‚Äč‚Äčactivity will allow us to get a global picture of the behavior of the national company in a context of change. Behavior with which we will try to identify some specific features of the innovation process, especially at the microeconomic level. 235

239Chapter IV: Application to the Algerian SME The following graph illustrates this diversity in the areas of activity of the companies examined. Figure N 33: Type of activity Source: Our work with SPSS software. (N=118) The following table shows the companies' distribution by type of activity: Table N 44: Type of activity. percent of the workforce. Valid percentage. Cumulative percentage. Agrifood 26 22.0 22.0 22.0 Energy, Chemistry 11 9.3 9.3 31.4 Textiles 10 8.5 8.5 39.8 Electronics and electrical industry 37 31.4 31.4 71.2 Valid services 7 5.9 5. Mechanics 9 5.9 5. .1 Municipal equipment 8 6.8 6.8 89.8 Furniture and decoration 1.8. 8 90.7 GWW 11 9.3 9.3 100.0 Total 0.0 100.0 Source: Our work with SPSS software. (N=118) Based on the results obtained, we see that the electronics and electrical industry comes first with a share of 31%, followed by the food industry with 22%. The graph below illustrates these rates. 236

240Chapter IV: Application to the Algerian SME Figure N 34: Breakdown by type of activity Source: Our work with SPSS software. (N=118) After presenting the different types of industries in our sample and their legal status, the table below shows a comparison between them. Table N 45: Activity cross-tab * Legal position Legal position Total Private Public Services BTPH Activity sector Industrial production Import and export Craft production, Total Source: Our elaboration with SPSS software. (N=118) The table can be represented in the following graph: 237

241Chapter IV: Application to the Algerian SME Figure N 34: Intersection between area of ‚Äč‚Äčactivity and legal status Source: Our work with SPSS software. (N=118) To establish the representative proportion of our sample for each sector in terms of regulatory requirements, we note that the majority of responses came from the industrial sector, with 38 companies under SARL legal form and 27 under EURL. This strengthens our sample because the innovation test is used much more often in industrial companies. The second result is represented by 15 companies in the form of LLCs in the service sector. Table N 46: Intersection of the work area with the legal requirements. Legal requirements Total EURL SARL SNC SPA Services BTPH Business sector Industrial production Import and export Small series production, Total Source: Our development with SPSS software. (N=118) 238

242Chapter IV: Application to Algerian SMEs The following diagram illustrates our analysis. Figure N 35: Intersection of business unit with legal form Source: Our elaboration with the software SPSS. (N=118) 5. Introduction of the respondents: When introducing the respondents, we chose questions about: professional qualifications (diploma), their hierarchical position in the company and their age to get to the essence of our research. Ugly. Professional qualification Applicable Table N 47: Professional qualification Education Proportion of staff Percent Valid Cumulative Percent None 1,8,8,8 Average level 3 2.5 2.5 3.4 Secondary education 53 44.9 44.9 48.3 University 52 44,1 94.61 44.6c. 0 Total. 0 100.0 Source: Our work with SPSS software. (N=118) According to the analysis table, almost 45% claim to have a secondary education and over 44% a university education. This is explained by the fact that most entrepreneurs are young and have completed a university education. The diagram below shows the correlation between age and professional qualifications. 239

243Chapter IV: Algerian SME application Table N 48: Crosstab Education * Age Age Total ‚Äď None Average Level Education Level High School University Vocational Education Total Source: Our development with SPSS software. (N=118) The table confirms that those Rependons who are either business owners or managers (see below) in the intermediate age group represent 32% of the high school level and 27% represent the senior age. B. Hierarchical position in the company Table N 49: Hierarchical position of respondents Percentage of the workforce Valid percentage Cumulative percentage Owner-manager 86 72.9 72.9 72.9 Valid manager 30 25.4 25.4 98.3 Founder 2 11, 07 in total: 07 .07 . elaboration with SPSS software. (N=118) The results confirm that almost 73% of the respondents are owners and managers and more than 25% are managers. This brings us back to a percentage of 98%. This is in line with our goals. 6. The importance of innovation in the company Table N 50: The importance of innovation in SMEs Inov1 Percentage of the workforce Valid percentage Cumulative percentage Strongly agree 81 68.6 68.6 68.6 Valid agree 37 31.4 31, 4 100.0 Our Total .0 100 Source: SPSS software. (N=118) 240

244Chapter IV: Application to Algerian SMEs According to the results of our research, more than 68% of the companies surveyed indicate that innovation is very important in their organization, and only 31.4% confirm that innovation can have an impact in business, that drives us to follow. our analysis and to know what are really the decisive factors for its execution. Section 2: Analysis Methodology This chapter allowed for the presentation and analysis of the results of the qualitative analysis, which took place in three phases: the documentary study, the interviews and the observation. An overview of all results is then presented. The documentary analysis revealed large differences in how companies took into account the key factors that drive or encourage companies to innovate. The method of our research is based on the complementarity between qualitative and quantitative approaches. Based on literature review and exploratory qualitative analysis. Before presenting the results of the test of our research model, a step is needed to stabilize and consolidate the instruments that measure the variables. In this chapter, the measures of the variables used to study and test the research model can be developed, described and stabilized. It starts with the presentation of the quantitative methods to evaluate the quality of the measurements and check the research hypotheses. Subsequently, the operationalization of variables and the data collection method are presented. Next, the procedure for implementing the variables and the type of dataset is discussed. Finally, the quality of the measuring devices is assessed. 1. Presentation of the statistical methodology implemented A statistical procedure will be implemented to evaluate and improve the quality of the instruments that measure the different variables developed: entrepreneur, human skills, financial results, partnership, competitive pressure and research and development related to the natural environment. The quality of the measures and scales is statistically assessed using exploratory factor analyzes (see Appendix 3), followed by analyzes of the structural equations to obtain a final overview of the measures used in this work. 1.1 Preliminary analyses: Before starting the multivariate analysis, it is necessary to pre-examine the data to identify the problems and find appropriate solutions. To do this, we proceeded to the following analyses: treatment of missing values, treatment of outliers, treatment of extreme values ‚Äč‚Äčand finally checking the normality of the data. Ugly. Handling Missing Values ‚Äč‚ÄčThe missing data present can have a significant impact on the results of our study and their interpretation, but according to the IBM SPSS Missing Values‚Äč20 Guide, when they occur in less than 5% of the data and are random. The effect is not significant and can be suppressed. In our case, the problem did not arise because we were present when the questionnaire was created and the test subject was obliged to answer all our questions. 241

245Chapter IV: Application to Algerian SMEs b. Dealing with outliers and extreme values ‚Äč‚ÄčEliminating outliers and extreme values ‚Äč‚Äčalso improves the non-multinormal nature of the data. Many statistical tests are sensitive to outliers. Therefore, it is important to identify them and make the right decision. Any extreme value that is unusually high or small in a data set is considered an outlier 626. These values ‚Äč‚Äčdiffer from the general trend of other observations in a data set with common characteristics 627. Outliers can arise either from an input error during data entry, an incorrect character substitution of missing values ‚Äč‚Äčin computer syntax, where missing values ‚Äč‚Äčare interpreted as real data, regardless of whether the selected sample has a non-normal distribution 628. For Hair et al. Give four reasons for your work, first an error in data entry or incorrect coding (e.g. answer of 6 on a scale of 5, extraordinary or unusual events may be the cause, some outliers have no explanation or subjects are good candidates). extinct and eventually arise with a combination of values ‚Äč‚Äčof different variables. Once the outliers have been identified, the researcher must decide whether to remove or retain them629. due to an entry error or similar observations that should not be included in the data set can be deleted. However, an outlier can be retained if this value is an observation that is accurately recorded and represents a valid item. of the data set Various methods have been developed to detect outliers. Regarding multivariate data, analysis of the square of the Mahalanobis distance (D¬≤)¬≤ is strongly recommended by many authors 630. According to Hair et al. it is suggested to calculate a normalized value (z) by squaring the Mahalanobis distance (D¬≤) by the number of variables examined (z=d¬≤/df). This is compared to a maximum acceptable value, which is set to 3 or 4 for large samples. Since we have 101 items in our model and set the maximum value to 4, analysis of our data shows that there is an abnormal value according to this criterion, which is due to registration errors. Given the small number of these observations and following Hair's recommendations, we decided to remove them from our database, ending up with 118 observations. Exploratory and confirmatory analysis Having identified the instruments suitable for the work carried out in the literature, it is appropriate to assess their quality in the specific context of this study. Given our research objectives, we would like to know the different determinants that can have a significant impact on the emergence of an innovation in business strategy and explain the relationships between the different variables in our model. In order to characterize the integration of innovation in the business strategy, we dedicate part of the data processing to the analysis and evaluation of the quality of the constructions' measurement scales. 626 Anderson et al., "Statistics for Business an Economics," 2nd ed., Southe Western, Nicolau Flaurence, "Treatment of missing values ‚Äč‚Äč‚Äč‚Äčand outliers," University of Nice Cote d'Azur, Tabachnick, BG and Fidell LS, "Multivariate Statistics use, 5th ed., Boston, MA: Allyn & Bacon, Pallant J., SPSS Survival Manual, 3rd ed., Crows West, New South Wales, Kline R., "Principles and Practices of Structural Equation Modeling" , 3rd ed. London: The Guilford Press,

246Chapter IV: Application to Algerian SME construction measuring equipment. Content validity refers to the "intersubjectivity of the items", i.e. H. it is based on the researcher's judgment, validated by peers in his scientific community, as the measurement tool is subject to consensus 631. In addition, the scales are adapted or created for the research, they have not been tested under similar conditions. It was therefore necessary to test the validity of the construct, i.e. the ability of the scale to correctly represent the described phenomenon. To verify the ability of the scales to measure the described phenomena, we analyzed the convergent and discriminant validity of each scale. A principal component factor analysis made it possible to clean the weight and avoid the phenomenon of multicollinearity. This method of cleaning measuring instruments was introduced by Churchill (1979) and is widely adopted by researchers due to the uniqueness of the proposed solution. Regarding the reliability of the factors resulting from the factor analysis, we verified that the selected items actually measure the latent variable. For this we used Cronbach's alpha. The use of an exploratory factor analysis is not absolutely necessary in connection with a hypothetico-deductive approach. However, the small number of studies that operationalize the variables in our research model requires an exploratory approach to the construction of measurement scales. Statistical procedure for assessing the quality of a measurement scale Assessment of the quality of a measurement scale consists in assessing its validity and reliability. Construct validity makes it possible to know whether the constructed indicators represent the phenomenon correctly. In practice, construct validity is assessed using convergent validity and discriminant validity. Convergent validity is judged on the basis of a strong correlation between the elements of a variable. Discriminant validity is assessed based on the low correlation between elements of different variables. Reliability corresponds to the degree of reproducibility of the results when the device is used again under identical conditions. With regard to Churchill's (1979) paradigm and the updates proposed by Gerbing and Hamilton, two phases can be identified in the process of analyzing the quality of a measurement scale: the exploratory phase, followed by a second confirmatory phase. 631 Evrard, Y., Pras, B., Roux, E., "Market, studies and research in marketing", 3rd edition, Dunod, Paris,

247Chapter IV: Application to Algerian SMEs Figure N 36: Process to analyze the reliability and validity of a measurement scale Exploratory phase The exploratory analysis allows for: - Revealing the factorial structure (identification and interpretation of the conceptual dimensions of the theory). Variable). - Examine the internal consistency reliability of the tool used (Cronbach's Alpha). In this study, it is done using data from the final sample. Statistical method used: principal component analysis with SPSS. confirmation analysis. Allows you to: - Decide on the dimensionality of the gauges. - Assess the reliability of the internal consistency (J√∂reskog's Rh√ī) of the scales. - Estimate the convergent and discriminant validity of measurement instruments. In this study, it is done using data from the final sample. Statistical method used: Confirmatory factor analysis using SPSS. Source: adapted from Jolibert and Jourdan (2006). The exploratory factor analysis is performed by implementing a principal component analysis (PCA). In connection with this work, it has been chosen to use the reference matrix, namely the correlation matrix. Since all scales used have never been tested under similar conditions since their translation, adaptation or creation for the study, it was necessary to check their construct validity. The construct validity study was carried out using a PCA divided into three phases: 1- Examination of the data: The study of the data is examined using means and standard deviation. The mean makes it possible to determine the central tendency by answering the following question: if we were to summarize the series of observations into one value, which would be the most representative? With the standard deviation, the variability can be assessed by answering the following question: What is the variability of the observations around the central tendency? The standard deviation thus allows us to control the distinctiveness of the elements. In fact, a standard deviation that is too small would mean that the item does not allow for discrimination between individuals. 2- Factorizable nature of data: To check whether the data can be decomposed, we use two tests: Bartlett's and Kaiser-Meyer-Olkins (KMO). Bartlett sphericity measures the significant lack of sphericity in the model. If the model is spherical, the correlations between variables are 0, so grouping into factors makes no sense. The test value must be less than or equal to 0.05. The SME test is a generalized measure of partial correlation between study variables (mean value of correlation coefficients). If the SME test is less than 0.5, it means that the study is invalid. If the SME test is higher than 0.90, the research has a very high validity. The SME test is supplemented with MSA measurements (Measure of Sampling Adequacy). The acceptance thresholds for these tests and indices are listed in the table below. 244

248Chapter IV: Application to Algerian SMEs Table N 51: Examination of the feasibility of data factorization Bartlett sphericity test SME or MSA index Examination of the conditions of factorization Key values ‚Äč‚ÄčRemarks P < 0.05 The test examines whether the shape of the scatter graph represents a bullet. It tests the null hypothesis that the variables are uncorrelated. A high value favors rejection of the null hypothesis. 0.5 < SME <1 If the SME index is between 0.5 and 1, we can conclude that the data can be decomposed. Source: Malhotra et al., (2007) 3 - Number of factors to retain. Dimensionality refers to the number of axes to keep. To answer the dimensionality question, an eigenvalue analysis is performed. The eigenvalue represents the total variance explained by each factor of 632. We use the Kaiser criterion to examine eigenvalues: keep all axes whose eigenvalue is greater than 1. the turning points (scree test). Finally, to define the number of dimensions, it is possible to preset a threshold corresponding to the smallest percentage of the total explained variance to be recovered, keeping the number of axes required to reach this threshold. These tests determine the number of dimensions of the shell. Table N 52: Identification of the number of factors. Percentage of variance explained cumulatively. Examination of the eigenvalues. Plot of eigenvalues. core values. Less than or equal to 60%. Eigenvalue > 1. Keep the factors before the inflection point Number of dimensions to keep. Notes This includes setting a minimum threshold to recover a percentage of the cumulative explained variance. Most authors estimate it at 0.6 (Evrard et al., 2003; Malhotra et al., 2007). Keep all factors whose eigenvalue is greater than 1. Use the graphical method (scree test) to identify the turning point(s). Source: Roussel et al. Option 4 - Interpretation of factor axes This includes the selection of the elements to be considered and the interpretation of the factor axes. It is necessary to evaluate the quality of the presentation of each item and discard those that do not meet the applicable conditions. To determine the importance of the initial variables in the formation of the factors, we determined the correlation coefficients between the initial variables and the retained factors. We retained the scale cleaning criterion from Evrard et al. (2003) and eliminated items with no factor contribution (loading) greater than or equal to 0.50 for any of the identified principal components. By looking at the highest correlation coefficients for a given factor, it is possible to find the initial variables that contribute the most to the formation of this factor. The higher the number in the matrix, the stronger the relationship between the variables. A variable must have a correlation of less than 0.3 for the other factors and a correlation of more than 0.7 for the factor to which it belongs. A general relationship is characterized by a 632 Malhotra N.K et al, "Marketing Studies with SPSS", 5th edition, Paris, Pearson Edition France.

249Chapter IV: Application to the Algerian SME correlation equal to 1. A general relationship is characterized by a correlation equal to 0. The table below shows the key values ‚Äč‚Äčfor interpreting the factor axes. Table N 53: Factor axis interpretation Joint analysis Factor contribution Analysis of variables Elements for consideration and axis interpretation Key values ‚Äč‚ÄčComments Less than or equal to 0.5 Factor weight on the main axis Less than or equal to 0.7 Factor weight < 0.3 on non-major axes Minimum factor weight difference between two factors: 0.4 This test certifies the quality of each element. This threshold is recommended. Variables with factor weights greater than 0.3 for multiple factors are eliminated. The minimum contribution difference between the factor weight of the main factor and any other factor must be 0.4. Source: Roussel et al., Opcit 5 ‚Äď Rotation of the axes: We have used rotations to facilitate the interpretation of the axes. According to Jolibert and Jourdan 633, orthogonal rotation is relevant when the goal is to use factor scores in later analyses. This has the advantage of facilitating the implementation of other analysis techniques such as regression, since the orthogonal rotation eliminates the phenomenon of multicollinearity between variables. For this reason, we systematically observed the distribution of the subjects over the factors before and after the orthogonal rotation. This type of rotation makes it possible to artificially increase the value of the correlation coefficients for certain variables with the new plot axes. We used Varimax's orthogonal rotation to maximize the weight of the factors by maximizing the correlation coefficients of the most correlated variables. Each of the variables in the set has the highest possible weight for one factor and the lowest possible weight for the other factors. The Varimax rotation thus makes it possible to distinguish the factors. 6 Factor Reliability Test At the end of the PCA, the internal reliability of the measure can be assessed. Therefore, after examining the validity of the scales, we approach the reliability of the factors resulting from factor analysis. In doing so, it must be checked whether the selected items actually measure the latent variable. For this, we use Cronbach's alpha, which serves as a reference measure. Cronbach's alpha (őĪ) is measured as follows (where k is the number of items in the test, V(i) is the variance of item i, COV(i,j) is the covariance between item i and item j): őĪ = (k /k-1)*[V(i)]/[V(i)+2COV(i,j)] If the elements are to measure the same phenomenon, they must be correlated, so the covariance (COV) must be large. If the covariance between i and j is high, l is close to 1, so the scale (that is, the amount of items) has good internal consistency. Questions that aim to measure the same thing actually measure the same thing. As a summary measure, we can use the sum of the items' scores. 633 Jolibert.A and Jourdan P., "Marketing Research: Research Methods and Marketing Studies", Dunod, Paris,

250Chapter IV: The application to the Algerian SME between i and j is weak, then l is close to 0, so the internal consistency of the scale is weak. In this situation, it is possible to clean by calculating alpha if each member of the dimension is removed. The factor analysis makes it possible to find the correlation of the elements with the first main factor that emerges from the analysis. In addition, the correlation of each element with the global scale (sum of elements) is indicated. The overall alpha is calculated, as is the alpha for each subset of items minus one of the items: the value 1 when item A is removed, the value of alpha when item B is removed. Any variable greater than the alpha coefficient must be descaled to improve alpha. Therefore, Cronbach's alpha should be as high as possible. If the study is exploratory in measuring constructs, the coefficient is acceptable if it is between 0.6 and 0.8. A value higher than 0.8 is recommended for a confirmatory study. 7- Summary of the exploratory factor analysis process. The measurement quality assessment process is summarized in the following diagram. We first performed a PCA on all the different elements representing the main variables of the model: first for the level of innovation elements, then for all elements of human skills, financial capacity, cooperation and finally for the competitive pressure on the elements in the context of R&D and other factors. In a second step, we performed a PCA for all variables in the model. We tested the unidimensionality of each factor by performing factor analysis on each of them. By performing a PCA for each group, the risk of collinearity could be avoided. Exploratory factor analyzes are performed using SPSS software. Figure n 37: Process of exploratory factor analysis Examining the data (mean and standard deviation) Analyzing the factorizability of the data (Bartlett, KMO, MSA) Performing a PCA Selecting the number of factors to retain (Kaiser, eigenvalues) Source : Roussel et al ., Opcit, 2002 After an initial phase of exploratory analysis, the measurement scales should be subjected to a confirmatory analysis. Confirmatory factor analysis Reliability of factors (Cronbach's alpha) 247

251Chapter IV: Application to the Algerian SME Confirmation Factor Analysis (CFA) is a second-generation data analysis method that applies a structural equation model to a measurement model. In this work, CFA is used to assess the quality of fit, reliability (J√∂reskog's Rh√ī) and validity (convergent, discriminant) of the measurement model. In contrast to PCA, which defines a posteriori factor structure, FCA defines an a priori factor structure, which we then try to confirm (Roussel et al., 2002). Confirmatory factor analyzes are performed using Statistica software. - Assessment of the fit of the measurement model The quality of the overall fit of the model can be assessed using numerous indices. These indices can be divided into three categories: absolute regulation indices, increasing indices and savings indices. Table N 54: The measurement model's absolute fit index Indices Acceptance thresholds Definitions Chi¬≤/dl <2 This index evaluates the fit quality of the model based on the number of degrees of freedom. Ghl < 0.9 The Goodness of Fit index, which varies between 0 and 1, measures the percentage of variance/covariance explained by the proposed model. AGFI >0.8 L Adjusted Goodness of Fit Index, which varies between 0 and 1, represents the amount of variance and covariance explained by the model, corrected for degrees of freedom. RMSEA < 0.08 and if possible < 0.05. The approximation of the root mean square error, which varies between 0 and 1, represents the average difference of freedom expected in the total population and not in the sample. RMR <0.05 The square root of the residual, which ranges from 0 to 1, represents the square root of the mean squares of the residuals SRMR <0.1 The standardized root mean residual, which ranges from 0 to 1, represents a standardized version of the RMR. Source: Roussel et al., Opcit, 2002 The incremental indices make it possible to compare the fit of the tested model with a more restrictive model, the so-called base model. The most commonly used basic model is the null model, which assumes no structural relationship between the variables. Roussel P et al. "Structural Comparison Methods: Research and Applications in Management", Paris, Economica, Roussel et al., Opcit,

252Chapter IV: Application to Algerian SMEs Table N 55: Increasing index or comparison of the measurement model Index Acceptance thresholds Definitions NFI >0.9 and if possible >0.95 The normalized adaptation index, which varies between 0 and 1, indicates the proportion of the overall weather. value represents the covariance between the variables explained by the tested model when the null model is used as reference. RFI >0.9 and if possible >0.95 Relative Fit Index, which varies between 0 and 1, is derived from NFI. CFI >0.9 and if possible >0.95. The Compare Fit Index, which varies between 0 and 1, measures the relative decrease in mismatches. Source Roussel et al., Opcit, 2002 The economic indices make it possible to compare different plausible equivalent models and determine the model with the best economy. Table N 56: Economy index for the measurement model Index Acceptance thresholds Definition ECVI >On the saturated model Expected cross-validation index evaluates the economy of the model. CAIC >About the Saturated Model The Akaike criterion for information consistency takes sample size into account to assess model economy. Source: Roussel et al. Opcit assessment of the measurement model's reliability and validity After the scale's factor structure has been identified, it is possible to assess the measurement instrument's reliability, convergent validity and discriminant validity. J√∂reskog's rho is used to assess the reliability of the scale. This index should be closest to 1. It is analyzed in the same way as Cronbach's alpha, and it is generally accepted that the reliability of the construct is good when the value of rho is greater than 0. The calculation of J√∂reskog's rho is as follows: J√∂reskog's Rh√ī = (sum of standardized factor). contribution)¬≤ [(sum of standardized factor contributions)¬≤ + (sum of indicator measurement error)] Table N 57: Reliability of a scale index threshold d acceptance J√∂reskog's Rh√ī definition > 0.7 assessment of the reliability of the scale construct. Source ; Roussel et al. Opcit, 2002 The convergent validity of a construct is checked by meeting three conditions. The first condition relates to the t-test associated with each of the factor contributions, which must be significant (CR>1.96). The second condition states that each indicator has more variance with its construct than with its associated measurement error. The place of 636 Roussel et al., Opcit,

253Chapter IV: Application to Algerian SMEs The factor contribution must therefore be greater than 0.5, as this coefficient represents the percentage of item variance recovered by the construct. The third condition concerns the extracted mean variance criterion (rho for convergent validity), which must be greater than 0.5 to check for convergent validity. Table N 58: Convergent validity of a measurement scale Index Acceptance thresholds Rh√ī validity definition >0.5 Explained variance of the constructs. Convergent t-test CR>1.95 The estimated parameters must be significant. This can be verified by the critical ratio. Quadratic factorial contribution >0.5 Percent of variance returned by the construct. Source: Roussel et al., Opcit. Discriminant validity represents the ability of indicators to distinguish separate constructs or to distinguish facets of the same construct when it consists of multiple dimensions. To analyze the discriminant validity of a measurement scale, the rho for convergent validity must be compared to the percentage of variance that the studied dimension or construct shares with the other concepts. Discriminant validity is checked when the convergent validity coefficient is greater than the squared correlation between the different constructs. Table N 59: Discriminant validity of a measurement scale Index Acceptance threshold Definition Discriminant validity Rh√ī of vc > (correlation between the constructs)2 Comparison of the Rh√ī of the convergent validity with the percentage of variance that the construct shares with the other concepts. Source: Roussel et al. After explaining the statistical procedure for evaluating the quality of a measurement scale, the instruments used in this work are analyzed for their reliability and validity. For this purpose, exploratory factor analyzes (ACP, performed on the final sample) and then, if the conditions are right, confirmatory factor analyzes (CFA, performed on the final sample) are developed. - Procedures for testing the research hypotheses We first mobilized the technique of factor analysis to separately test the items used in our analysis. Second, we complemented these methods with second-generation methods, namely structural equations. The advantage of this technique is that all research hypotheses can be thoroughly tested. Structural equation modeling is a statistical method that is part of multivariate analysis methods 637 and is called "path analysis" 638 or more commonly known as "structural equation modeling (SEM)". These models analyze the linear causal relationship. Design and Analysis: An Integrated Approach, Hillsdale, NJ: LEA,

254Chapter IV: Application to Algerian SMEs between several variables (dependent and independent) simultaneously called latent 639. Several researchers, especially in marketing, have emphasized the contribution of this statistical technique compared to traditional techniques. It allows the testing of complicated relationships between 640 variables, such as the study of mediating variables. The regression coefficients estimated by this method are more accurate because it accounts for all model 641 measurement errors. According to Roussel et al. the application of the structural equation model goes through the following steps 642: - The development of the theoretical model on the basis of the existing literature - The specification of the theoretical model taking into account the identification rules, which do not differ from those of a measurement model. The estimation of the model involves the choice of the initial data matrix (we mention here that our choice is for the correlation matrix) and the estimation method (we chose the maximum likelihood method). This method requires a sample size of at least 100-150, but ideally it can be as large as 100-150. The identification of the model corresponds to the software estimating the values ‚Äč‚Äčof the parameters in the structural equations. We used the software IBM SPSS version. The assessment of the fit quality of the structural model: we will use the same fit indices as before. A poor fit can lead to a re-specification of the model when theoretically justified. - Interpretation of the results: the significance of the postulated relationships ^ makes it possible to confirm or deny previously formulated hypotheses. The t-score is obtained by dividing each unstandardized regression coefficient by its standard deviation, which is associated with a probability level. In the social sciences, the commonly accepted threshold is 5%, which corresponds to a minimum absolute value of t of 1.96. Table N 60: Summary of the statistical methods for testing the research hypotheses Statistical method Regression analysis Structural equations Purpose To investigate individual causal relationships. Systemic view of model causality for a confirmatory purpose of regression analysis. Before performing this quantitative analysis, it is important to check the quality of the information collected. The absence of missing values ‚Äč‚Äčis guaranteed by the questionnaire processing procedure. In this way, 118 questionnaires could be collected without missing data. As for the extreme values, the boxplots show only a very small fraction of these values. Les 639 Roussel et al., Opcit, Mrabet Amina, Effect of persuasive advertising on brand personality and attitudes to the brand, Algerian consumer study‚ÄĚ, thesis, Abou Bakr Belkaid University, Tlemcen, Algeria, 2013, P Hair Joseph F., Anderson Rolph E., Tathan Ronald L. and Black William C., Multivariate Data Analysis, Fifth Edition, Prentice Hall International Inc., Upper Sadle River, New Jersey, Mrabet Amina, Opcit, P Kline R., Opcit,

255Chapter IV: Application to Algerian SMEs The relevant comments have therefore been retained as no major contradictions could be identified in the responses of these few individuals. Regarding the symmetry and kurtosis coefficients, all skewness indices are less than 1 and all kurtosis indices are less than 1.5. This meets the conditions for performing the analyses. Table 61: Previous statistical checks. Things to check. absence of outliers. the normality of the data distribution. Source: Roussel et al. Opcit, presentation of factor analysis In order to validate the research hypotheses, in the following lines we will specify the operational goals for the investigated variables. These variables relate to the creation of innovation in SMEs, which are the main drivers of innovation, including leadership, human skills, financial capacity, partnership, competitive pressure and research and development. 1- The validity of the innovation measurement In order to assess the quality of the innovation measurement, a principled component analysis is carried out. In our analysis, we could not summarize all elements of innovation in one analysis. Therefore, we divided our analysis into two groups: Innov 1 and Innov 2. Innov 1 was basically based on the position of innovation in the company, and Innov 2 consists of the brakes and barriers that the company encounters when innovating. To perform the exploratory factor analysis of innovation, the validity and then the reliability of this measure are examined. Verification of the Innov 1 data is examined using mean and standard deviation. The mean value of the items shows a relatively high central tendency, which lies between 1.31 and 3.36. The standard deviations show a spread between 0.46 and 1.37, which is sufficient for five-point scales. The correlation matrix shows a determinant of 0.02. The factorability of the data is assessed using the Bartlett test of sphericity and the KMO test. Bartlett's test of sphericity has a high chi-square ratio (863.475) and a significance of 0.000, which makes it possible to reject the hypothesis of simultaneous nullity of all correlations. The SME test is close to 0.6 (0.591), indicating a high factorial effect of the data. The matrix of anti-image correlations suggests conservation of the 15 elements. Table N 62: Tests before decomposition of innovation measurement scale data. Test Cronbach's Alpha Probe 0.804 KMO 0.591 Chi-Square 863.475 Bartlett

256Chapter IV: Application to Algerian SMEs Source: Our work with SPSS software. (N=118) PCA is performed on the correlation matrix. Regarding the Kaiser criterion, two axes have an eigenvalue greater than 1. These two axes explain 72.73% of the total variance. The eigenvalue plot (scree test) confirms this five-factor solution, as the inflection point is very pronounced at the level of the sixth axis, and the eigenvalues ‚Äč‚Äčfor axes 6 to 15 roughly agree. Table N 63: Total variance Explained Component Initial eigenvalues ‚Äč‚ÄčSum of squares of factors held for rotation Total % of cumulative variance % Total % of cumulative variance % 1 4,271 28,470 28,470 2,977 19,846 19. 5209 09. 5209 19. 5209 8. ,95 0 5 0.256 8.376 64.756 1.653 11.017 61, .197 7.979 72.735 1.638 10.921 72.735 6.886 5.905 78.640 7.742 4.949 83.589 8.351 8 .389 8.389 8.389 8.39 8.39 8.7 .362 90,690 10,430 2,865 93,555 11,305 2,031 95,585 12,227 1,515 97,100 13,193 1,286 98,386 98,306 91.016 99106 99106 14.015 Source: Our elaboration was done with the SPSS software. (N=118) The interpretation of the factor axes from the component matrix allows to assess the quality of the representation of the 15 elements and to omit the elements that do not meet the conditions. To make the factor axes easier to read, we used an orthogonal varimax rotation. The component matrix after Varimax rotation provides better visualization of the distribution of items across the five retained factors. Table N-64: Transformation matrix of Innov 1 components Component 4. 726 Source: Our compilation using SPSS software. (N=118) 253

257Chapter IV: Application to Algerian SMEs The same examination of the data is examined using mean and standard deviation. The average of the items shows a relatively high central tendency, which is between 1.79 and 2.89. The standard deviations show a spread between 0.82 and 1.35, which is sufficient for five-point scales. The factorability of the data is assessed using the Bartlett test of sphericity and the KMO test. Bartlett's test of sphericity has a high chi-square value (772.230) and a significance of 0.000, which makes it possible to reject the hypothesis of simultaneous nullity of all correlations. The SME test scores above 0.6 (0.634), indicating a high factoring capacity of the data. The matrix of anti-image correlations suggests conservation of the 15 elements. In this analysis, we have removed 8 items to keep the best. Table N 65: Test before decomposition of innovation measurement scale data. Test sample Cronbach's Alpha 0.799 KMO 0.634 Chi Deux 772.230 Bartlett Source: Our development with SPSS software. (N=118) PCA is performed on the correlation matrix. Regarding the Kaiser criterion, two axes have an eigenvalue greater than 1. These two axes explain 76.36% of the total variance. The eigenvalue plot (scree test) confirms this six-factor solution, as the inflection point is very pronounced at the level of the seventh axis, and the eigenvalues ‚Äč‚Äčfor axes 7 to 15 are about the same. Table N 66: Total variance Explained Innov 2 Component Initial Eigenvalues ‚Äč‚ÄčSum of squares of factors held for rotation Total % Cumulative variance % Total % Cumulative variance % 1 4.274 28.493 28.493 2.584 17.227 17.23031 17.23031 17.23031 05 1 31. 628 10,853 53,166 2,046 13,642 44,245 8,298 61,464 2,005 13,367 58,186 7,906 69,370 1,427 9,516 67,049 6,992 7 6,362 6,362 6,362 6,362 8,752 6,362 6,362 8,527 125 81 .487 8. 613 4,087 85,575 9,583 3,884 89,458 10,520 3,465 92,924 11,305 2,033 94,957 1 2,728 1 2,728 1 2,728 1 2,728 3 98,14 8 14,181 1,210 99,358 15,096 , . 000 Source: Our work with SPSS software. (N=118) 254

258Chapter IV: Application to Algerian SMEs According to the table, we can say that the factor axes of the matrix of components make it possible to assess the quality of the representation of the 15 elements and to remove the elements that do not meet the conditions. Table N 67: Innov 2-component transformation matrix 61 .341.607.339.017 6.005 -.199 - .021.118 - , 498.835 Source: Our elaboration with the Statistica software. (N=118) The component matrix after Varimax rotation provides a better visualization of the distribution of items over the six retained factors. 2. The validity of the measurement Entrepreneurs When examining the data, use is made of the mean value and the standard deviation. The average of the points shows a high central tendency, which is between 1.34 and 3.59. The standard deviations show a spread between 0.89 and 1.67, which is sufficient for a five-point scale. The factorability of the data is assessed using the Bartlett test of sphericity and the KMO test. Bartlett's test of sphericity gives a chi-square of (276.495) and is significant at 0.000, allowing us to reject the hypothesis of simultaneous nullity of all correlations. The SME test is 0.630, indicating strong factorability of the data. The anti-image correlation matrix suggests keeping 10 elements and rejecting 6 elements. Table N 68: Tests before decomposition of innovation measurement scale data. Test sample Cronbach's Alpha 0.522 KMO 0.630 Chi Deux 276.495 Bartlett Source: Our development with SPSS software. (N=118) PCA is performed on the correlation matrix. Based on the Kaiser criterion, three axes have an eigenvalue greater than 1. These three axes explain 59.469% of the total variance. The eigenvalue plot ("scree test") confirms this three-factor solution, as the inflection point on the fourth axis is marked and the eigenvalues ‚Äč‚Äčon axes 4 through 10 roughly match. 255

259Chapter IV: Application to Algerian SMEs Table N 69: Total Variance Explained Component Initial Eigenvalues ‚Äč‚ÄčSum of Squares of Factors Held to Rotation Total % of Cumulative Variance % Total % of Cumulative Variance % 1 2.736 27.365 27.365 2.12191 2, 12191 2.12191 028 1.947 19.469 40 205 83.640 7.512 5.119 88.759 8.431 4.315 93.074 9.429 4.286 97.360 10.264 2.000SSla source with our SP software. (N=118) The interpretation of the factor axes from the component matrix makes it possible to assess the quality of the representation of the 10 elements and to discard the elements that do not meet the conditions. To make the factor axes easier to read, we used an orthogonal varimax rotation. The component matrix after Varimax rotation provides a better visualization of the distribution of the items over the three retained factors. Table 70; Component transformation matrix Component .767,326,553 2,011 -.868, .642,375,669 Source: our elaboration with Statistica software. (N=118) 3. The validity of measuring human skills The same test was developed using mean and standard deviation. The average of the points shows a high central tendency, ranging from 1.31 to 2.62. The standard deviations show a spread between 0.62 and 1.81, which is sufficient for five-point scales. The factorability of the data is assessed using the Bartlett test of sphericity and the KMO test. Bartlett's test of sphericity gives a chi-square of (58.017) and is significant at 0.000, allowing us to reject the hypothesis of simultaneous nullity of all correlations. The SME test is 0.561, indicating good factorability for the data. The anti-image correlation matrix suggests retaining 5 elements and rejecting 13 elements. 256

260Chapter IV: Application to Algerian SMEs. Table N 71: Test before decomposition of innovation measurement scale data. Tests Probe Cronbach's Alpha 0.505 KMO 0.561 Chi Deux 58.017 Bartlett Source: Analysis Result A PCA is performed on the correlation matrix. Regarding the Kaiser criterion, two axes have an eigenvalue greater than 1. These two axes explain 59.173% of the total variance. The eigenvalue plot ("scree test") confirms this two-factor solution, as the inflection point on the third axis is marked and the eigenvalues ‚Äč‚Äčfor axes 3 through 5 agree. Table N 72: Total variance Explained Component Initial eigenvalues ‚Äč‚ÄčSum of squares of factors held for rotation Total % of cumulative variance % Total % of cumulative variance % 1 1,759 35,186 35,186 1,597 31,931 31, 2,192 31, 2,199 31, 2,199 242 59.1 73 3,915 18,308 77,481 4,634 12,676 90,157 5,492 9,000 Source: Our elaboration with SPSS software. (N=118) The interpretation of the factor axes from the component matrix makes it possible to assess the quality of the representation of the 5 elements and to discard the elements that do not meet the conditions. To make the factor axes easier to read, we used an orthogonal varimax rotation. The component matrix after Varimax rotation provides a better visualization of the distribution of the elements on the two retained factors. Table No. 73: Component transformation matrix Component 1 2 1,842, .539,842 Source: our elaboration with the Statistica software. (N=118) 4. The validity of the measure of financial strength The same test was developed using mean and standard deviation. The average of the points shows a high central tendency, ranging from 1.89 to 2.54. The standard deviations show a range between 1.09 and 1.26, which is sufficient for a five-point scale. The factorability of the data is assessed using the Bartlett test of sphericity and the KMO test. Bartlett's test of sphericity gives a chi-square of (249.367) and is significant at 0.000, allowing us to reject the hypothesis of simultaneous nullity of all correlations. The SME test scores 0.670, indicating the high ability of the data to factor. The matrix of anti-image correlations suggests keeping 5 elements and rejecting one element. 257

261Chapter IV: Application to Algerian SMEs. Table N 74: Test before decomposition of innovation measurement scale data. Cronbach's Alpha Test 0.767 KMO 0.670 Chi Deux 249.367 Bartlett Source: Result of Analysis Probe A PCA is performed on the correlation matrix. Regarding the Kaiser criterion, two axes have an eigenvalue greater than 1. These two axes explain 78.669% of the total variance. The eigenvalue plot ("scree test") confirms this two-factor solution because the inflection point on the third axis is marked and the eigenvalues ‚Äč‚Äčfor axes 3 through 5 are roughly aligned. Factorial axes from the component matrix make it possible to assess the quality of the representation of the 5 elements and to ignore the elements that do not meet the conditions. To make the factor axes easier to read, we used an orthogonal varimax rotation. The component matrix after Varimax rotation provides a better visualization of the distribution of the elements on the two retained factors. Table N 76: Transformation Matrix of Components Component 1 2 Table N 75: Explanation of Total Variance Component Initial Eigenvalues ‚Äč‚ÄčSum of Squares of Factors Retained for Total Variance % Cumulative % 45 6,895 96,382 5,181 3,000. Source: Our elaboration with the SPSS software. (N=118) 1,901, ,434,901 Source: Our deepening with the SPSS software (N=118) 5. The validity of the partnership measurement The same study is prepared using the mean and standard deviation. The average of the points shows a high central tendency, which is between 1.44 and 3.33. The standard deviations show a spread between 0.73 and 1.62, which is sufficient for five-point scales. The factorability of the data is assessed using the Bartlett test of sphericity and the KMO test. Bartlett's test of sphericity shows a chi-square value of 258

262Chapter IV: Application to the Algerian SME of (602,640) and significant at 0,000, which makes it possible to reject the hypothesis of simultaneous invalidity of all correlations. The SME test scores 0.625, indicating the high ability of the data to factor. The anti-image correlation matrix suggests that 11 elements are retained and 4 elements are rejected. Table N 77: Tests before decomposition of innovation measurement scale data. Test sample Cronbach's Alpha 0.797 KMO 0.625 Chi Deux 602.640 Bartlett Source: Our development with SPSS software. (N=118) PCA is performed on the correlation matrix. According to the Kaiser criterion, four axes have an eigenvalue greater than 1. These four axes explain 72.849% of the total variance. The graph for the eigenvalues ‚Äč‚Äč("scree test") confirms this two-factor solution, as the inflection point is marked at the level of the fifth axis, and the eigenvalues ‚Äč‚Äčfor axes 4 to 11 are approximately the same Table N 78: Sum of variance explained component Initial eigenvalues ‚Äč‚ÄčSum of Squares of Factors Held to Rotation Total % of Variance Cumulative % Total % of Variance Cumulative % 1 3.830 34.819 34.819 2.305 20.951 20.724 15. 0.339 12 .17 5 62.671 1.965 17.866 58 .120 10 .178 72,849 1,561 14,191 72,849 5,939 8,538 81,387 6,671 6,100 87,487 7,550 5,000 92,487 92,367 92,369 3 2,121 97,304 10,194 1,768 99.0 72 11,102, .000 Source: Our work with SPSS software. (N=118) The interpretation of the factor axes from the component matrix allows to assess the quality of the representation of the 11 items and to reject the items that do not meet the conditions. To make the factor axes easier to read, we used an orthogonal varimax rotation. The component matrix after Varimax rotation provides a better visualization of the distribution of items over the four retained factors 259

263Chapter IV: Application to Algerian SMEs Table N 79: Transformation matrix of the components Component .556.578.501, .716.489 -.087.491 3.406.238 -.858.203 4.112 -.609.070.782e software Source: Our SP software. (N=118) 6. Competitive pressure The same test is developed using mean and standard deviation. The average of the points shows a high central tendency, which is between 1.16 and 1.28. The standard deviations show a spread between 0.36 and 0.64, which is sufficient for five-point scales. The factorability of the data is assessed using the Bartlett test of sphericity and the KMO test. Bartlett's test of sphericity has a chi-square of (99.729) and a significance of 0.000, which makes it possible to reject the hypothesis of simultaneous nullity of all correlations. The SME test is 0.518, indicating strong factoring power of the data. The matrix of anti-image correlations suggests the conservation of the three elements. Table N 80: Tests before decomposition of innovation measurement scale data. Test Sample Cronbach's Alpha 0.663 KMO 0.518 Chi Deux 99.729 Bartlett Source: Our work with SPSS software. (N=118) PCA is performed on the correlation matrix. Based on the Kaiser criterion, the three axes have an eigenvalue greater than 1. These three axes make it possible to account for 100% of the total variance. Table N 81: Total variance explained Component Initial eigenvalues ‚Äč‚Äč7. R&D Total % variance Cumulative % 1 1,845 61,488 61,488 2,903 30,092 91,580 3,253 8,000 Source: our SPSS e-software. (N=118) The final research is elaborated on the basis of the mean value and the standard deviation. The average of the points shows a high central tendency, which is between 1.47 and 1.92. The standard deviations show a spread between 0.72 and 1.06, which is sufficient for scales of 260

264Chapter IV: Application to Algerian SMEs five points. The factorability of the data is assessed using the Bartlett test of sphericity and the KMO test. Bartlett's test of sphericity has a chi-square of (118.676) and a significance of 0.000, which makes it possible to reject the hypothesis of simultaneous nullity of all correlations. The SME test scores 0.743, indicating a high ability of the data to factor. The matrix of anti-image correlations suggests keeping four elements and rejecting only one. Table N 82: Test before decomposition of innovation measurement scale data. Test Example Cronbach's Alpha 0.764 KMO 0.743 Chi Deux 118.676 Bartlett Source: Our elaboration with the Statistica software. (N=118) PCA is performed on the correlation matrix. Based on the Kaiser criterion, the four axes have an eigenvalue greater than 1. These four axes make it possible to account for 100% of the total variance. Table N 83: Total variance Explained Component Initial eigenvalues ‚Äč‚ÄčTotal % Variance % Cumulative 1 2,366 59,160 59,160 2,680 16,995 76,155 3,556 13,902 90,057 9,009 4,009 4,009 source. (N=118) We summarize our factor analysis in the following table: Table N 84: Summary of Cronbach alpha factor analysis SME Bartlett INNOV: 1 2 0.804 0.799 0.591 0.634 0.000 0.000 ENTR 0.5002 0.5002 0.06002 0.06002 0.5002 0 .5002 0.5002 CH 0.504 0.799. 00 CF 0 0.767 0.670 0.000 PAR 0.797 0.625 0.000 PC 0.663 0.518 0.000 R&D 0.764 0.743 0.000 Source: Our elaboration with SPSS software. (N=118) Using a multivariate analysis, we calculated the three indices KMO, Cronbach's alpha and Bartlett's test. These indices attempt to describe the factors that drive innovation in companies. 261

265Chapter IV: Application to Algerian SMEs A high SME indicates that there is a statistically acceptable factorial solution that represents the relationships between the variables. In our case, it is the variable Research and Development (F&U) that fulfills the condition, followed by Financial Capability (CF). On the other hand, the variables Entrepreneur, Partnership, Human Competence and Competitive Pressure and their SME scores are similar, as the respondents believe that for innovation it is necessary to take into account the factors that the Internet and the company's external environment influence. . Company. Company. The Cronbach index also supports our results. The value of (INNOV) is highest compared to the other variable with an average of 0.8. This helps us determine the extent to which potential indicators of a variable are compatible with each other. Let us specify the variables (R&D, PC, CF, PAR) with an őĪ greater than 0.6, which explains why there is good agreement between the variables. We can also notice that the variables ENTR and CH have a slightly lower őĪ than the others, but are greater than 0.5. This explains why the items in our questionnaires were satisfactory and may allow us to continue our analysis. In addition, our results are good because the Bartlett test of sphericity of all variables tends to 0.000 and is therefore very telling. 3- Presentation of the confirmatory factor analysis With these exploratory factor analyses, we have a measure of innovation in terms of the entrepreneur, human skills, financial capacity, partnership, competitive pressure and R&D. Regarding the creation of a measurement scale, it is important to confirm it. Confirmatory factor analysis confirms the structure of the scales and examines their reliability and validity. To assess the adequacy of the results of the data recorded with this a priori defined measurement model, a factorial structure is specified. The quality of fit of our measurement model is assessed using absolute, comparison, and parsimony fit indices. 1. The absolute indices of fit Absolute Index: they are used to assess the extent to which the theoretical model reproduces the observed data. Several indices are available: some test the quality of fit (so-called "goodness of fit" indices), while others test badness of fit (so-called "non-centrality" indices). Some indices show not only a central value but also a confidence interval. Chi¬≤ is 358,068 for innovation for the entrepreneur and for human skills and for the four variables: economic performance, partnership, competitive pressure and R&D, an average ratio of less than 2 , which corresponds to the percentages of variance explained, assessed by the GFI and AGFI indices, is unsatisfactory, as the two variables ENTR and CH are well above the threshold of 0.9, while the group CF, PAR, PC, R&D and INNOV is above 0.7, which explains why our results are quite satisfactory. And for AGFI a very satisfactory result, also with an average of more than 0.8 for ENTR and CH, while the other variables register an average of 0.6, which explains an average level of satisfaction. The RMSEA proposed by Steiger and Lind (1980) represents the average rate according to degrees of freedom, is below the threshold of 0.08 for most variables, which according to Raufaste (2007) explains that it is a good result because it has value 1 not exceeded. The residual value for RMR is slightly above the recommended threshold of 0.05. So is 262

266Chapter IV: Application to the Algerian SME SRMR, proposed by Joreskog and Sorbon (1984), represents the mean estimate of the standardized residuals. The measurement of our model is very satisfactory and well below the threshold of 0.1. All benchmarks are satisfactory. Table N 85: Absolute Fit Indices INOV ENTR CH Indices CF, PAR, PC, RD Chi_2 3875, .068 59, .703 Degrees of Freedom DF 435,000 55,000 10,000 Level p RMC Standardized Residuals 0.0075 0.0075 0.007 7. FI). Annual forest 0.734 0.967 0.959 0.729 (AGFI). Joreskog 0.650 0.850 0.876 0.635 Non-centralized population parameter 4.852 0.958 0.006 3.377 Steiger-Lind RMSEA index 0.091 0.048 0.035 0.079 0.079 Population 964 0.079 0.079 gamma. 5 Population Adjusted Gamma Index 0.583 0.846 0.789 0.566 Source: our elaboration with Statistica software. (N=118) 2. Incremental indices These are indices that assess what the tested model offers compared to a base model used as a reference. If the distribution is not very normal, it is better to use especially the first two indices. Table No. 86: Incremental fit indices INOV ENTR CH CF, PAR, PC, RD (NFI) indices. Normalized Bentler Bonett adjusted index 0.524 0.726 0.774 0.673 (NNFI). Abnormal Bentler-Bonett adjusted index 0.567 0.734 0.759 0.623 (RFI). Statistics. (N118) Bentler-Bonnett NFI represents the fraction of total covariance explained by the tested model compared to the base model, a good result as it is 0.5 for INNOV and close to 0.7 for Exceeds CF, PAR , PC and RD, a very good result, satisfactory result for ENTR and CH. Bentler-Bonnett's NNFI, or TLI, tests the improvement the tested model brings over the base model. Taking into account the parsimony of the model, the results show an NNFI of more than 0.550, which is close to 0.9 for CH. This explains that the fit of our measurement model is good. The ball's rho represents the reduction in the distance function per degrees of freedom when moving away from the base model. It is an adjustment of the NFI that remains sensitive to sample size. A score between 0 and 1, for INNOV and for CH. We can also say that it is a good result. 263

267Chapter IV: Application to Algerian SMEs 3. Sparse indices They are used to avoid overestimating models with too many parameters and to determine if the poor fit of a model is not due to a lack of free parameters (too many fixed parameters ) is due ). Allows determination between several plausible models favored by the Occam's Razor criterion. James-Mulaik and Brett's PNFI matches the NFI in terms of degrees of freedom of the tested model. Its use is limited to model comparison. A result of 0.887 for CH and 0.741 for BETWEEN, which explains a good result. For the other variables, the result is above 0.5, which explains a satisfactory result. Table 87: The Parsimonious Fit Indices INOV ENTR CH Indices CF, PAR, PC, RD James-Mulaik-Brett Parsimonious Fit Index PNFI 0.516 0.741 0.887 0.648 Source: our elaboration with the Statistica software. (N118) We can summarize and say that the fit indices for our measurement model are: the absolute indices (Chi¬≤, RMSEA, GFI, RMR, Gamma and Adjusted Gamma), the incremental indices (CFI, NNFI, NFI) and sparse indices (PNFI) were generally good. Both savings indices are met because the values ‚Äč‚Äčof our model are lower than the values ‚Äč‚Äčof the saturated model. 4. Measurement index for symmetry The symmetry and shape of the distribution are measured by skewness and kurtosis. These statistics are presented with their standard errors. The coefficient of skewness measures the asymmetry of a distribution. A normal distribution is symmetric, that is, the values ‚Äč‚Äčare equal on either side of the center of the distribution and has a skewness value of 0. A distribution with significant positive skewness is a right-handed asymmetric distribution (the distribution lasts for ). a long tail to the right) and a distribution with significant negative skewness is a left-skewed distribution (the distribution has a long tail to the left). This asymmetry is explained by the fact that the differences in one direction are greater than in the other. The kurtosis coefficient is used to measure the bumpiness or flatness of a curve resulting from a frequency distribution. In other words, the kurtosis coefficient makes it possible to measure the degree of concentration of the observations at the end of the curve. The kurtosis coefficient is 0 for a normal (Gaussian) distribution. A negative kurtosis thus indicates that the tails have a larger number of observations than in a Gaussian distribution. Kurtosis and skewness coefficients can be used to ensure that variables follow a normal distribution, a necessary requirement for many statistical tests. It is estimated that the coefficient of symmetry or skewness must be less than 1 and the coefficient of smoothness or kurtosis less than 1.5 for the variable to actually follow a normal law. 264

268Chapter IV: Application to Algerian SMEs A. The asymmetry indices for the INNOV variables Table N 88: The asymmetry indices for the innovation variables Manifest variables Skewness Corrected Normalized Skewness Skewness (INOV)-1->[inov1] -0.804- 0.814 -3.564 (INOV)-2 ->[inov2] -0.843-0.854-3.738 (INOV)-3->[inov3] -0.723-0.733-3.208 (INOV)-4->[inov4] -1.002-1.015- 4.443 (INOV)-5- > [inov5] -0.793-0.803-3.515 (INOV)-6->[inov6] -1.094-1.108-4.853 (INOV)-7->[inov7] -1.077-1.091-4.775 (INOV)-8->[ inov8] -2.358-2.389-10.458 (INOV)-9->[inov9] -1.903-1.928-8.440 (INOV)-10->[inov10] -3.206-3.247-14.216 (INOV) >[inov11] - 0.587- 0.595-2.604 (INOV)-12->[inov12] -1.767-1.789-7.835 (INOV)-13->[inov13] -1.246-1.262-5.514 (->[)- inov14] -0.232- 0.235-1.027 ( INOV)-15->[inov15] 0.420 0.425 1.861 (INOV)-16->[inov16] -0.698-0.707-3.095 (INOV)-167->inov. 0.628-2.749 (INOV) )-18->[inov18] -0.552-0.559-2.447 (INOV)-19->[inov19] -1.131-1.146-5.015 (INOV)-20->[inov242] -0.. 249] -0..249] - 1.091 (INOV)- 21->[inov23] -0.525-0.532-2.328 (INOV)-22->[inov24] -0.719-0.728-3.189 (INOV)-23->[ inov27] -0.4109 -0.4109-0. (INOV)-24- >[inov29] -0.214-0.216-0.947 (INOV)-25->[inov30] -0.383-0.388-1.700 (INOV)-26->[inov32] 0.135 0.137 (INOV.6) - >[inov34] - 1.703-1.725-7.553 (INOV)-28->[inov36] -1.059-1.073-4.698 (INOV)-29->[inov37] -0.804-0.814-3.564 (INOV) [ inov38] -0.843 - 0.854-3.738 Source: our elaboration using the Statistica software. (N=118) 265

269Chapter IV: Application to Algerian SMEs Table no. 89: The flatness indices for the variables Innovation The manifest variables Corrected normalized kurtosis Kurtosis Kurtosis (INOV)-1->[inov1] -0.138-0.044-3.118 (INOV)-2- > [ inov2] 0.074-0.132 0.561 (INOV)-3->[inov3]-0.475-0.120-3.965 (INOV)-4->[inov4]-0.706-0.095-7.406 (INOV)-5->[inov5 0.779 -0.115 -6.754(INOV)-6->[inov6]-0.349-0.100-3.476 (INOV)-7->[inov7]-0.011-0.134-0.079 (INOV)-8->[inov8]-0.328 0.074 -4.444( INOV)-9->[inov9]-0.241-0.058-4.184 (INOV)-10->[inov10]-0.691-0.075-9.213 (INOV)-11->[inov11]-0.424 -0.424 6.086 (INOV)- 12->[inov12]-0.931-0.083-11.181 (INOV)-13->[inov13]-0.374-0.082-4.571 (INOV)-14->[inov14]-0.0180-6. INOV )-15->[inov15] -0.016-0.120-0.136 (INOV)-16->[inov16] -0.168-0.119-1.408 (INOV)-17->[inov17] -0.459-0.100-4.5) - 18 ->[inov18]-0.067-0.107-0.627(INOV)-19->[inov19]-0.109-0.080-1.373(INOV)-20->[inov22] 0.016-0.119 0.121(INOV)- [ inov23] -0.123 -0.131-0.934 (INOV)-22->[inov24] -0.365-0.126-2.886 (INOV)-23->[inov27] 0.123-0.094 1.306 (INOV)-249 0.367 -0.108-3.408(INOV)-25- >[inov30]0.015-0.105 0.142 (INOV)-26->[inov32]-0.200-0.107-1.866 (INOV)-27->-[inov32]->0.1041]->-[inov32] Source: our elaboration at using the Statistica software. (N=118) The skewness results confirm the normality of the scales used. On the other hand, the kurtosis coefficient indicates that the coefficient for INNOV 2, INNOV 22, INNOV 27 and INNOV 30 is positive between 1 and 0. However, these values ‚Äč‚Äčdo not contradict the hypothesis of normality and thus the analysis of variance is performed. Table N 90: Asymmetry indices for entrepreneurial variables The manifest variables Skewness corrected skewness Normalized skewness (ENTS)-1->[entr1] -1.009-1.022-4.474 (ENTS)-2->[entr4] -1.0618 (4.0618- 1.046-1) ENTS)- 3->[entr5] -0.659-0.668-2.923 (ENTS)-4->[entr6] -0.822-0.832-3.644 (ENTS)-5->[entr8] -2.765-2.801- 12.261 -6- >[entr11] 0.250 0.254 1.110 (ENTS)-7->[entr12] -0.738-0.748-3.275 (ENTS)-8->[entr13] (ENTS)-9 ->[entr14] 0.5023 ] 0.53023 -1.015 2.365 -4.443 (ENTS)-10->[entr15] -0.733-0.743-3,

270Chapter IV: Application to Algerian SMEs (ENTS)-11->[entr16] -1,749-1,772-7,758 Source: our work with Statistica software. (N=118) Table N 91: Smoothing Indices of Business Variables Manifest Variables Corrected Normalized Kurtosis Kurtosis Kurtosis (ENTS)-1->[entr1] -0.540-0.511-1.198 (ENTS)-2->[entr4] 0.484 0.484 0.284 . (ENT ) -3->[Entr5] -1.019-1.011-2.259 (ENT)-4->[Entr6] -0.490-0.459-1.086 (ENT)-5->[Entr8] 6.684 7.029 14.822 (ENT) -> [entr11] -0.814-0.797-1.805 (ENTS)-7->[entr12] -0.557-0.529-1.235 (ENTS)-8->[entr13] -1.429-1.438-3.168 (ENTS) [entr14 ] -0.363- 0.326-0.805 (ENTS)-10->[entr15] -0.558-0.530-1.238 (ENTS)-11->[entr16] 1.912 2.049 4.240 Software Source: with our statistical elabor. (N=118) For the ENTR variable, the skeness results confirm the normality of all scales used. On the other hand, the coefficient of kurtosis indicates that the coefficient of ENTR4, ENTR8 and ENTR 16 is between 1 and 0. However, these values ‚Äč‚Äčdo not violate the assumption of normality too much and therefore the analysis of variance is performed. Asymmetry indices for the variable CH Table N 92: Asymmetry indices for the variable Human competence The manifest variables Skewness Corrected Normalized Skewness Skewness (CH)-1->[CH2] -0.227-0.131-1.731 (CH)-2-> [CH3 ] -1.697-0.342 - 4.963 (CH)-3->[CH7]-0.346-0.137-2.523 (CH)-4->[CH11]-0.286-0.122-2.332 (CH)-5->[CH17]- 0.310-0.080-3.895 Source : our deepening with Statistica Software. (N=118) Table N 93: Smoothing Indices of the Variable "Human Competence" Manifest Variables Corrected Normalized Kurtosis Kurtosis Kurtosis (CH)-1->[CH2] -0.928-0.916-2.057 (CH)-2->[CH3 ] - 1.732-1.756-3.842 (CH)-3->[CH7]-0.641-0.616-1.420 (CH)-4->[CH11]-0.635-0.610-1.408 (CH)-5->[CH18] 1.89 2,033 4,208 Source: our work with Statistica Software. (N=118) For the variable CF, the Skeness results confirm the normality of all scales used. The kurtosis coefficient, on the other hand, indicates that the CH17 coefficient is between 1 and 0. However, these values ‚Äč‚Äčdo not violate the assumption of normality too much, and therefore the analysis of variance is performed. 267

271Chapter IV: Application to Algerian SMEs. Asymmetry indices for CF variables. Table N 94: The asymmetry indices for the variable "financial capacity". Bias Corrected Normalized Manifest Variables Bias Bias (CF)-1->[CF1] -0.526-0.533- 2.335 (CF)-2->[CF2] -0.340-0.344-1.508 (CF)-3->[CF3] - 0.656-0.665-2.910 (CF)-4->[CF5] -0.313-0.317-1.390 (CF)-5->[CF6] -1.799-1.822-7.978 Source: our elaboration with the Statistica software. (N=118) Table N 95: Flattening indices for the variable "Financial strength" The manifest corrected normalized variables Kurtosis Kurtosis Kurtosis (CF)-1->[CF1] -0.602-0.575-1.334 (CF)-2->[ CF2 ] -0.716-0.695-1.588 (CF)-3 ->[CF3] -0.842-0.826-1.866 (CF)-4 ->[CF5] -1.359-1.366-3.014 (CF)-5 ->[CF6] - 1.409 -1.418-3.123 Source: our elaboration with the Statistica software. (N=118) Regarding the CF variables, the results of skewness and kurtosis confirm the normality of all scales used. However, these values ‚Äč‚Äčdo not violate the assumption of normality too much, and therefore the analysis of variance is performed. Asymmetry index for the partnership variables Table N 96: Asymmetry index for the partnership variables Manifest variables Bias Corrected bias Normalized bias (PAR)-6->[PAR5] -0.163-0.165-0.724 (PAR)-7->[PAR6] 0.191 0.194 0.847 (PAR)- 8 ->[PAR7]-0.117-0.118-0.517(PAR)-9->[PAR8]-1.326-1.343-5.879(PAR)-10->[PAR9]-1.225-1.4321-5. (PAR)-11-> [PAR10] -0.125-0.127-0.555 (PAR)-12->[PAR11] -1.171-1.186-5.193 (PAR)-13->[PAR12] -2.314-2.344-10.262 (PAR ) -14->[PAR13 ] -2.092-2.119-9.278 (PAR)-15->[PAR14] 0.324 0.329 1.438 (PAR)-16->[PAR15] -0.526-0.533-2.332 Source: our statistical source: software . (N=118) Table N 97: Kurtosis indices for partnership variables Manifest variables corrected Normalized Kurtosis Kurtosis Kurtosis (PAR)-6->[PAR5] -0.993-0.983-2.201 (PAR)-7->[PAR6] -1.596 - 1.613 -3.539 (PAR)-8->[PAR7] -1.592-1.609-3.531 (PAR)-9->[PAR8] (PAR)-10->[PAR9] -0.103-0.147-0.160-0.206 -0.228 - 0.326 (PAR)-11->[PAR10]-1,505-1,519-3,

272Chapter IV: Application to Algerian SMEs (PAR)-12->[PAR11] -0.063-0.014-0.141 (PAR)-13->[PAR12] 6,431 6,764 14,259 (PAR)-14->[PAR13] 5,3870 116,874 (5. PAR)-15->[PAR14] -1.485-1.497-3.293 (PAR)-16->[PAR15] -1.442-1.452-3.197 Source: our elaboration with the Statistica software. (N=118) The PAR variable captures satisfactory bias results and confirms the normality of all scales used. On the other hand, the coefficient of kurtosis indicates that the coefficient of PAR 12 and PAR13 is between 1 and 0. However, these values ‚Äč‚Äčdo not violate the assumption of normality too much and therefore the analysis of variance is performed. Index of the asymmetry of the variables PC Table N 98: the indices of the asymmetry of the variables Competitive pressure The manifest variables Skewness Corrected skewness Normalized skewness (PC)-17->[PC1] -2.432-2.463-10.784 (PC)- 18 - > [PC2 ] -1.845-1.868 -8,180 (PC)-19->[PC3] -3,554-3,600-15,763 Source: our elaboration with Statistica Software. (N=118) Table N 99: The smoothing indices of the variable "competitive pressure" The manifest corrected normalized variables Kurtosis Kurtosis Kurtosis (PC)-17->[PC1] -5.375-5.663-11.919 (PC)-18-> [PC2 ] - 1,402-1,516-3,110 (PC)-19->[PC3] -16,651-17,432-36,922 Source: our elaboration with the Statistica software. (N=118) For CP, the results of skewness and kurtosis confirm the normality of all scales used. However, these values ‚Äč‚Äčdo not violate the assumption of normality too much, and therefore the analysis of variance is performed. R&D Variable Asymmetry Index Table N 100: Research and Development Variable Asymmetry Indices Manifest Variable Skewness Corrected Skewness Normalized Skewness (RD)-20->[RD1]-0.538-0.545-2.384 (RD)-21->[RD2] -1.849 1.873 -8.199 (RD)-22->[RD4] -1.986-2.011-8.806 (RD)-23->[RD5] -1.678-1.699-7.440 Source: our elaboration with the Statistica software. (N=118) Table N 101: The kurtosis indices for the R&D variables The manifest corrected normalized variables Kurtosis Kurtosis Kurtosis (RD)-20->[RD1] 1.090 1.085 2.417 (RD)-21->[RD2] - 4490- 4738-9955 (RD)-22->[RD4]-3834-4054-8501 (RD)-23->[RD5]-1844-1978-4,

273Chapter IV: Application to Algerian SMEs Source: our development with Statistica Software. (N=118) Skeness' results confirm the normality of all scales used. The kurtosis coefficient, on the other hand, indicates that the RD1 coefficient is between 1 and 0. However, these values ‚Äč‚Äčdo not violate the assumption of normality too much, and therefore the analysis of variance is performed. 4- Testing the hypotheses: After assessing the quality of the measuring instruments, it is possible to test the research hypotheses. Each tested analysis model is divided into two parts; the measurement model and the construction model. The first provides the indicators (observed variables) for each latent variable. Each indicator is theoretically defined by the designer of the analysis model or by using the factor structure of the scale that appears at the end of an exploratory PCA-type factor analysis. The second concerns the hypotheses of linear relationships between the latent variables and corresponds to the relationships defined a priori by the designer of the analysis model. According to the analysis F a = ő≤ ab *F b +ő≤ ac *F c + +ő≤ ap *F p +D a F a: latent variable A (construct, factor) D a: disturbance of A (4-theory of zeta- measurement error of the latent variable) ő≤ ab: regression coefficient to be estimated, which indicates the strength of the influence of the latent variable P on the latent variable A Table N 101: Equations of the structural model Variable equation Entr Innov Innov = ő≤1 . Enter + őĺ1. Innovation = 0.618. Enter CH Innov Innov = ő≤1. KH + őĺ1. Innovate = 0.255. CH CF Innov Innov = ő≤1. CF + őĺ1. Innovation = 0.422. CF OF Innov Innov = ő≤1. PAIR + őĺ1. Innovation = 0.230. FROM PC Innov Innov = ő≤1. PC + ¬Ķ1. Innovate = 0.501. PC RD Innov Innov = ő≤1. RD + őĺ1. Innovation = 0.238. RD Enter RD RD = ő≤1. Enter + őĺ1. RD = 0.265. Input CH RD RD = ő≤1. KH + őĺ1. RD=0.418. CH

274Chapter IV: Application to Algerian SMEs CF RD RD = ő≤1. CF + őĺ1. Innov = CF OF RD RD = ő≤1. CF + őĺ1. RD=-0.294. PAR research and development RD= ő≤ 1.ENTR + ő≤ 2.CH + ő≤ 3.PAR + ő≤ 4.CF + D 1 RD= 0.265.ENTR +0.418.CH - 0.294.PAR -0.330.CF + 0.652 Innovation Innov= ő≤ 1.ENTR + ő≤ 2.CH + ő≤ 3. CF + ő≤ 4. PAR + ő≤ 5 PC + ő≤ 6 RD + D 1. Innov = 0.618.ENTR + 0.255.CH + 0.422. CF+-0.230. PAR+ 0.501. PC + 0.238.RD+ 0.928 Source: our elaboration with Statistica software. (N=118) Before proceeding with the interpretation and discussion of the results, we present a summary of the results of our study of the model in the figure below. Figure N 38: Concept model Entrepreneur Human skills R&D Partnership INNOVATION Financial strength Competitive pressure Our hypotheses are confirmed or disproved in the following table: Table N 102: Result of the hypotheses N Explanation of the hypothesis Confirmation H1a The entrepreneur is the initiator or central point. of the confirmed innovation process in connection with an SME H1b The more the entrepreneur is focused on research and development, the greater the chance for innovation. Confirmed H2a The more skilled employees the company has, the more it has confirmed 271

275Chapter IV: Application of innovation skills in Algerian SMEs H2b HR in the form of staff dedicated to R&D will promote proven innovation in SMEs H3a The availability of financial resources increases the confirmed innovation capacity of SMEs H3b The company with an R&D specific budget has a greater chance to invalidate innovations H4a A company acting in an integrated way (partnership) has a proven high influence on its innovative capacity H4b Invalidation of external R&D collaborations increases the willingness to innovate in SMEs H5 Competitive pressure has a positive impact on the SMEs' confirmed ability to innovate H6 Research and development is the cornerstone of innovation. Acknowledgments Section 3: Discussion of Results The results of our model strongly support the role of the entrepreneur in the firm's chance for innovation. In fact, the regression coefficient is 0.618, Student's t is 3.633 and P is less than , 2010, Florence le Brie et al. 2010, Michel Bundick 2013); This confirms that the entrepreneur is indeed a decisive and very important factor in the probability of creating innovations in the Algerian business. Regarding the results of the hypothesis that H1b was confirmed with a coefficient of 0.265, T see student greater than 1.90 and P less than 0.05, we agree with the idea of ‚Äč‚ÄčDjeflat A. (2012) that R&D- activities take place when the entrepreneur focuses on action and the needs of the moment, Bencheikh et al. (2006) and Olga B et al. (2008) confirm that the existence of an R&D-oriented innovation leadership increases the ability of SMEs to integrate innovations and succeed. It is widely recognized that the quality of human resources has a significant impact on the company's ability to innovate. The results of our analysis confirmed that competent employees in the company have a great influence on the propensity to innovate with a coefficient of 0.255, a Student's T of 2.72 and a P of . In fact, the early stages of the innovation development process require specific knowledge and skills that may be key to later development. The skills possessed by the company through its employees would enable it not only to use internal and external information to convert it into knowledge. Here we join the authors who have pointed out that the lack of qualified personnel is often one of the biggest obstacles to their innovation activities. Since the H2b hypothesis was confirmed with a high correlation coefficient compared to the relationship between entrepreneurs and R&D (0.418), this relationship was confirmed by several authors who explained that the presence of staff dedicated to R&D created by stimulating exchanges with the external environment increases the use of information resources 272

276Chapter IV: Application to wealthy Algerian SMEs and corporate creativity. We agree with the agreement of Bencheikh et al. 2006, Mehdi Rhaiem 2010, Mairesse and Mohnen 2011 It appears that SMEs with financial resources are more likely to innovate. The results of the table even show that the availability of resources affects the pace of innovation. This percentage was expressed by a coefficient of 0.422, a Student's t greater than 1.90, and P less than . We then join Frenza et al., 2009, Flaurence le brie et al., 2010 and Michel Bundock, 2013 in confirming our hypothesis. Several authors have confirmed that there is a very important relationship between economic performance and R&D by stating that investments in R&D activities have a positive influence on the implementation of innovations (Mairese and Mohnen 2005, Griffith et al. 2006, INSEE 2013). The results of our analysis showed that this relationship is not significant, which means that the correlation coefficient can be explained by neglecting the importance of Algerian companies' R&D activities. Our hypothesis was disproved. Regarding the cooperation with the external environment, we note that the development of partnerships stimulates the creation of innovations in SMEs. As can be seen from the table, cooperation with external actors has a positive and significant effect on the degree of innovation with a coefficient of 0.230, a Student's T of 2.14 and a P of 0.032; The pace of innovation will therefore increase with the companies' ability to collaborate, in accordance with the studies consulted (Idrissi A., 2012, Norrin and Etienne St Jean 2012, Michel Bundock 2013). The result of the correlation between partnership and R&D is negative with a correlation coefficient of , forcing us to refute our hypothesis, although this result has been confirmed by several authors (Gersbach and Schmutzler 2003, Cassimmam and Veugeler 2005, Idrissi 2012). can be explained by the fact that the Algerian company has no interest in research and development. A significant correlation has been found for the influence of competitive pressure on the likelihood of innovation. With a correlation coefficient of 0.501, Student's t was greater than 1.90 and P was . This result explains the role of competition on the innovation capacity and confirms that of previous research (Gorin Autant 2012, Rahmouni 2012 and Safoulanitou 2013). For the last hypothesis was also confirmed, namely that research and development are the cornerstones of innovation. This explains that any company that carries out research and development activities has a chance to achieve an innovation, it creates a favorable environment for its implementation. implemented. We therefore join the authors who have confirmed that his contribution to the innovation process in SMEs remains important (Dillan Thechckedalh 2012, Jean Christophe, 2012 and Maarouf Ramadan, 2012). In summary, according to our results, of the six elements considered in our model to influence the innovation capacity of SMEs, only entrepreneurial culture, competitive pressure and financial capacity have a real influence on the innovation rate. Innovation with very satisfactory coefficients (0.618 and 0.422). 273

277Chapter IV: Application to Algerian SMEs Due to the small size of the sample, we were not able to deepen the research. A larger sample could have produced more convincing results and with higher coefficients. Furthermore, given the Algerian environment, the place of innovation can be highly dependent. Conclusion Our research shows, as several previous empirical studies have shown, that the ability of SMEs to innovate generally depends on their inherent characteristics and the context in which they operate. For the more the company is led by a qualified entrepreneur and has financial strength and human competencies, the greater the chance that it will innovate in products or services in order to take advantage of economies of scale on the one hand and to maintain market shares on the other. Other things. on the other hand, internal and external communication based on a process or organizational innovation. Other features that positively influence the likelihood of innovation are cooperation with the outside world (other companies, the university, etc.) and competitive pressure and R&D. These results also suggest that consideration of the demands of the environment has become one of the strategies that require the rationalization of the entire organization. We can also say that the Algerian company has not yet understood the importance of research and development within its organization. The results confirm that, despite the importance of innovation, the company does not invest and does not participate in research and development. Ultimately, innovation in Algerian companies does not necessarily follow the traditional determinants emphasized in developed countries, but it is certain that these companies do not have the capacity to develop large-scale innovations that significantly increase production volumes. Knowledge of a is of global importance and provides significant benefits. Their innovation activities are much more focused on mastering and imitating foreign technologies, often with a gradual improvement of existing knowledge to better adapt to the specific needs of each company. 274

278General conclusion

279General conclusion General conclusion Companies increasingly operate in environments where technological progress and innovation are seen as key factors in achieving a market position. Therefore, innovation has become a major issue in several countries (if not all countries) and policies and policies are being considered to establish a national innovation system. As part of the National Innovation System (SNI), the company, especially SMEs, represents the main carrier and medium for innovation. The assessment of resources in innovation projects makes an important contribution to the development and maintenance of competitive advantages. Innovation in this sense is no longer the exception, it is becoming the rule and a permanent part of business. Innovation is an interactive process that involves many actors in companies and their environment. Interactions occur in more or less formal networks and alliance systems that break away from the idea that innovation is an exogenous phenomenon. In addition, the innovation process appears as a learning process, where the company's internal and external competences are bundled in interaction with its surroundings. The innovativeness of companies rests on the one hand on their ability to extract information in connection with interactions with the environment, especially as part of their involvement in networks, and on the other hand on their ability to integrate and process information. this information in connection with internal interactions to generate new knowledge. For small businesses, the manager's role in developing these skills seems paramount. All the relationships he maintains with the various partners, as well as his involvement in networks, seem to define his ability to know. However, it is the company's specific organizational characteristics that determine the absorption and production of new knowledge, which is reflected in innovations. Innovation activity is more than ever at the core of the company, the company's ability to innovate is the result of the interaction between a large number of organizational and institutional factors such as company strategy, personnel management, the company's environment, culture and actions from the public sector. In addition, the company's innovativeness depends on its ability to optimize the combination of the so-called factors. In Algeria, spending on research and development is less than 1% of GDP. This low share is largely due to weak investments in research from the private sector. Innovation is more or less present in large companies, but SMEs are insufficiently involved in research and innovation activities. Since there are no statistics on innovation in Algeria, if we take innovation patent application as an indicator, the Algerian National Institute of Industrial Property has so far registered more than 2000 inventions protected by patents, of which 80% are of foreign origin; The remaining 20% ‚Äč‚Äčare large national companies and very rarely SMEs. In addition, and this is a core problem, innovation faces the lack of an innovation policy in Algerian companies, planned and organized innovation activities and innovation activities that are planned and organized for Algerian companies and for which the company has specific material, intangible, available. human and financial resources. On the one hand, this is explained at the level of the company 276

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280General conclusion from the weakness of the interfaces, insufficient forms of organization and communication information systems, the lack of a program to improve skills and qualifications, insufficient financial resources and finally insufficient cultural systems strengthen the spirit of innovation and creativity. In addition, Algerian companies, especially SMEs, are often characterized by a lack of innovation capacity. There are several obstacles that stand in the way of the development of innovation projects in these companies. Most small businesses have limited financial resources. To finance R&D efforts or innovation-related investments, these companies face the obstacle of accessing external financing. In Algeria, the banks do not lend enough to SMEs and there is no market to guarantee the supply of risk capital. Another obstacle to the development of innovations in small businesses is the lack of information about technological developments. There is a lack of mastery of technologies and new knowledge to support the innovation process. In fact, the internal skills of Algerian SMEs, such as researchers, technicians, production and marketing personnel, etc., are very weak. It should therefore be noted that in Algeria there is no real financial support from the public sector for the training of SMEs to improve their skills. In this context, we can say that the implementation of government measures to support innovation is of great importance to facilitate the emergence of an innovation process in SMEs. In addition, relays and support structures allow small and medium-sized enterprises to pool knowledge and know-how and transfer technology to stimulate the development of innovation projects. In terms of intermediaries and support structures, there is the Algerian Local Chamber of Industrial Production (CALPI), whose role is to support SMEs in facilitating the acquisition of new investments (new technologies), and the Algerian Chamber of Commerce and Industry (CACI). ), whose task is to inform companies about technological developments, markets and products. However, the measures taken by these structures in favor of SMEs are limited. Despite all the efforts and awareness of the problem, the Algerian authorities have not yet succeeded in establishing an actual innovation policy that will promote the development and competitiveness of companies. For all these reasons, the aim of our research was to assess the capacity of the innovation share in SMEs and to determine the critical factors that can influence this emergence. To this end, a review of the relevant literature on innovation in SMEs has identified several factors believed to have a significant impact on driving innovation. These were grouped into six important key factors: the entrepreneur and human skills, financial strength, cooperation with the external environment, competitive pressure and R&D. The various analyzes carried out on a sample of 118 SMEs produced some interesting results. It has been observed that a large number of SMEs give the entrepreneur an important place, as he is the initiator or focal point of the innovation process in the company and especially the SME, his ability to interact with internal and external actors, his desire for innovation and growth, its strategic vision in relation to innovation and its focus on R&D activities will influence the propensity to innovate and the resources and skills it will deploy to establish this activity. 277

281General conclusion We cannot say that the entrepreneur can carry out his innovation project alone, but other determinants must be integrated, which according to our analysis also have a positive influence. Similarly, financial resources, human skills, partnerships and competitive pressure are also important determinants of the propensity to innovate. The available funds certainly facilitate the creation of innovation activities, but in our analysis we found a very weak correlation between investment in R&D activities. The availability of qualified and competent employees has a positive influence on the chance of innovation. Working in synergy with partners to implement economic development projects for innovation goes hand in hand, except that entering into R&D collaborations with other companies or with other research institutes and innovation shows a negative correlation. And finally, competitive pressure has a positive influence on the company's ability to innovate. As always, our research has limitations that should be noted. The first concerns the external validation of the results, i.e. their representativeness and generalization potential. Limiting our research to SMEs effectively prevents us from extrapolating our conclusions to other areas of interest to larger firms. Second, given the empirical nature of the study, a larger sample size than before was needed to perform more sophisticated statistical tests and allow for more in-depth analysis. Despite these limitations, this research provides a better insight into the ability of SMEs to integrate innovation into their activities. She suggests that SME managers should place more emphasis on developing partnerships with external actors to improve their capacity. It should be noted that the proposed model is still relevant for investigating the innovative capacity of SMEs. Our study also appears to be a pioneering work - to our knowledge, it is the first study to empirically investigate the combined effect of a large number of variables on the innovation share of Algerian SMEs - and sheds the first light on the decisive drivers behind innovation in SMEs. In-depth studies could only improve the understanding of the phenomenon of innovation in the context of SMEs. 278

282Conclusion: general bibliography

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317Attached files

318Appendix 1 1. Research and research promotion organizations in Algeria From independence to today, Algeria has established a number of institutions and organizations to serve the country's needs for research, innovation and technology transfer. Therefore, we present them here for their respective tasks: 1.1 National Bureau for Scientific Research (ONRS) The National Bureau for Scientific Research (ONRS) was created by Decree No. ONRS was established as an instrument to implement the policies established by The Algerian government to promote and direct scientific research and had the following task: Stimulating and supervising the scientific research of universities and institutes, including through awarding and awarding of contracts; To monitor the scientific activities and management of the research centers to ensure that they function properly and that the research programs are carried out; Ensuring connection and coordination between the research user sector on the one hand and universities, institutes and research centers on the other hand to contribute to and for this purpose the valorization of research results; To sign research agreements and contracts with individuals or entities; collection and dissemination of scientific and technical information at national level; To facilitate or secure the publication of studies and research; acquire, create, deposit or exploit licenses, designs or patents; Proposals for the establishment of new research centres; To promote the training and promotion of national researchers in universities and research centers through the use of appropriate resources and in particular through the awarding of grants and prizes; Within Algeria and outside the territory, within its powers, to carry out all studies and works that are related to its purpose and may promote its development; Participation in international scientific activities. This body was dissolved into the Center for Scientific and Technical Information and Technology Transfer (CISTTT). The Center for Scientific and Technical Information and Technology Transfer (CISTT) was established in 1974 with the creation of the ONRS and was tasked with collecting the scientific and technical information available in Algeria; To give Algerian scientists, managers and technicians access to the world's scientific and technical literature; assess needs and fill gaps in scientific evidence; Securing the link between the Algerian documentary film network and foreign networks; facilitate the dissemination of scientific and technical information between publishers and users of that information;

319Annex 1: promoting the training of documentarians, in particular by familiarizing them with modern methods of documentary research; Dissemination of information to interested national organizations on the sources of imported technologies and their economic and legal aspects; Carry out detailed sector studies of the technologies available worldwide, their acquisition costs, the commercial practices associated with these technologies and the impact of their transfer on the socio-economic development of the country; Ensure the execution of all works or studies entrusted to him by the Ministry of Higher Education and Scientific Research, ONRS, public and semi-public institutions and local authorities within the area in question; Participation in international scientific activities. 1.3 The High Council for Scientific and Technical Research (CSRST) In 1982, the High Council for Scientific and Technical Research (CSRST) was established. This board is tasked with determining the main lines of the national policy for scientific research and technological development, coordinating its implementation and evaluating its implementation. In this context, it is in particular responsible for: defining the main opportunities for scientific and technical research, for which it establishes objectives and priorities; Adoption of guidelines for national scientific and technical research plan; adopt guidelines for national investment programs to promote and develop scientific and technical research; Evaluation of the results of the actions carried out within the national plan for scientific and technical research. The Council is also responsible for: defining general policies for maintaining, improving and developing the national scientific and technical potential; Take measures to adapt the organizational framework of scientific research to the various stages of its development and evolution. 1.4 Scientific and Technical Research Unit In order to achieve the scientific and technological development goals stipulated in the National Development Plan, Decree No. These research units are basic units for carrying out research work and consist of research teams, one or more laboratories, workshops or other appropriate support facilities. They are established with the aim of carrying out the research activities under the scientific and/or technological programme, which includes several research projects. These research units are responsible for the following tasks: to carry out all survey and research work related to their purpose; promote assimilation, mastery and acquisition of new scientific and technical knowledge;

320Appendix 1 Reproduce on a reduced scale certain industrial techniques for solving technical production problems. Carrying out adaptation tests that may lead to improvements in production techniques and products; development of new techniques; Contribute to education in research; disseminate research results; Collection and processing of scientific and technical information related to this purpose and ensuring its preservation and dissemination; Regular evaluation of his research work. In the same year, research centers were established within the central administrations by decree of 10 September. Its main task was to implement and carry out scientific and technological development programs in the field specified for it in the Basic Decree. 1.5 The Committee for Scientific and Technical Research (CRST) By decree of 7 July 1984, the Committee for Scientific and Technical Research (CSRT) was established. This commissariat is tasked with contributing to the national scientific and technical research policy and consolidating technological independence. It identifies, analyzes and prepares all elements necessary for the development and application of national scientific and technical research policies. The Commission is particularly responsible for the following tasks: preparation of the elements that contribute to the determination of national scientific and technical policy objectives; Preparation of annual and multi-annual scientific and technical research plans with all sectors with a view to their integration into the national economic and social development plan; Together with all sectors concerned, they prepare preliminary proposals for annual budgets for scientific and technical research in accordance with the national plan for scientific and technical research and the evaluation of the results achieved; Together with the sectors concerned, prepare the preliminary drafts of scientific and technical information plans and programs and ensure the implementation and monitoring of the approved plans. 1.6 Research Center for Scientific and Technical Information (CERIST) The Research Center for Scientific and Technical Information (CERIST) was established by decree no of 16 March. CERIST took over the activities of CISTTT. Its task is to carry out all research work in connection with the establishment, implementation and development of a national scientific and technical information system. It ensures e.g. the coordination of scientific and technical information programs within agreed frameworks and in collaboration with the sectors involved. CERIST is primarily responsible for: studying and proposing appropriate regulatory measures to ensure the development and promotion of scientific and technical information;

321Appendix 1: Participation in the establishment and development of a national scientific and technical information network; participate in the creation of databases in all areas of science and technology in each of the sectors concerned and promote their access to the various users through coordinated actions; Propose all measures that can guarantee users a rational acquisition and dissemination of scientific and technical information at national level; Promote the introduction of modern technical resources such as: computers for the collection and processing of scientific and technical information and the development of software systems for the automation of documentation research and scientific and technical information. Coordination of the national documentation network's connection with foreign networks within scientific and technical information. 1.7 High Commissioner for Research (HCR) The High Commissioner for Research (HCR) was appointed by decree no of 8 April. Its overall task was to implement national research policies according to government decisions and priorities. He was also responsible for the implementation of the national sustainable energy policy. UNHCR's main tasks are as follows: To identify and propose national research programs for the sectors concerned; With regard to the sectors concerned, develop the annual and multi-annual research plans for the programs established and integrated into the national development plan; Coordinate, monitor and harmonize the implementation of the approved programs and research plans in relation to the sectors concerned; Take responsibility for the implementation of research programs and plans when required by the nature and importance of the subject; Regularly evaluate the implementation of research programs and plans and report to the government according to established procedures; To propose all regulatory and financial measures appropriate to stimulate research activities, improve their organization and develop and make profitable scientific and technical potential, especially in higher education institutions; organization, standardization and coordination of the collection, processing, use and dissemination of scientific and technical information; Implementation of actions related to the sectors concerned, aimed at assimilating, improving and disseminating research results and results through education, information, innovation and popularization actions. 1.8 Center for Development of Advanced Techniques (CDTA) Center for Development of Advanced Techniques (CDTA) was established by Decree No. of 22 March 1988 under the authority of UNHCR. The main tasks related to the management of R&D activities, training, services and scientific and technical information within the two sub-sectors, namely the cybernetics sub-sector

322Annex 1, which brings together the laboratories for systems architecture, robotics, microelectronics and software engineering and the ionized media sub-sector, including the laboratories for lasers, plasmas and thermonuclear fusion. 1.9 Development Center for Renewable Energy (CDER) The Development Center for Renewable Energy was established in 1988 by decree no of 22 March. This center is responsible for the development and implementation of research and scientific development programs and technologies in the field of renewable energy and in particular the related areas of solar, wind and geothermal energy. Its task was to collect, process and analyze all data enabling accurate evaluation of solar, wind and geothermal resources; Ensure the research work to develop renewable energy production within each of the fields of solar, wind and geothermal energy; Development of all technical procedures, devices, equipment and measuring equipment necessary for the use and operation of renewable energy; Development and proposal of site qualification standards; Development and proposals for standards for the manufacture and use of renewable energy equipment. The National Council for Scientific and Technical Research (CNRST). The National Council for Scientific and Technological Research (CNRST) was established by an executive order of 13 January. The task of the Council is to decide on the main lines of national policies for scientific research and technological development, to coordinate their implementation and to monitor their implementation. In this context, it is particularly responsible for: defining the main opportunities for scientific and technical research; Adoption of guidelines for national scientific and technical research plan; evaluation of the results of the actions carried out within the framework of the national plan for scientific and technical research; decide on the general policies for the preservation, promotion and development of the national scientific and technical potential; Take measures to introduce organizational frameworks for scientific research at the various stages of development and development. Intersectoral commissions for the promotion, programming and evaluation of scientific and technical research (CIPPERST) were established together with the creation of the CNRST by decree no of 13 January. The main task of these committees is to promote, coordinate and evaluate the research and technological development of the programs for which they are responsible. The National Agency for the Development of University Research (ANDRU)

323Appendix 1 The Agency for the Development of University Research (ANDRU) was established by executive order no of 2 July. ANDRU's mission is to stimulate and support the development and promotion of research activities under national research programs in accordance with the applicable regulations and located within university teaching and research institutions. The main tasks are: developing the annual programs and ensuring their implementation; implement and monitor procurement within its programs; establishing monitoring and evaluation mechanisms for the research activities for which it is responsible; Funding of the selected research projects through agreements and/or contracts; promoting and strengthening mechanisms and circuits for the support, administrative and financial management of university research; ensure dissemination and promotion of the research results for which it is responsible; Participation in the organization and material and financial support of national and international scientific events related to his field of activity; provide technical and financial support for the procurement of equipment and scientific documentation necessary for its programs; Promote and support training and retraining programs related to their field of activity. The Agency for Velarization of Research and Technology Development Results (ANVREDET). In 1998, the National Agency for Velarization Results Research and Technology Development (ANVRRDT) was established. ANVREDET's mission is to implement the national technological development strategy together with the relevant structures and authorities, especially through the transfer of results and their dissemination. Several tasks have been assigned to this agency (this is a point we will explain in more detail later in the chapter) 1.13 Algerian Technology Transfer Association The Algerian Technology Transfer Association is a scientific association regulated by the law of 4. December 1990 established in It aims to create a meeting place and an active mediator to integrate the synergies necessary for effective engineering and technology transfer by: creating a dynamic interface between the knowledge pools found in universities, colleges and research centers in Algeria or abroad on the one hand and potential users on the other. Creation of a forum in the form of a virtual forum for Algerian scientists thanks to new information and communication technologies

324Annex 1, regardless of where they live, who want to contribute to the advancement of technology; Creating a framework for advice and knowledge exchange. In particular, this association has the following objectives: to explore ways and means of promoting research and development work carried out in Algeria or abroad that may have outlets and potential applications in the country; Think about how you can engage the scientific community abroad and live out native skills in general abroad. Contribute to the transfer of new technologies and their integration, in particular through the dissemination of successful experiences in the adaptation and integration of technologies; promote the link between university and industry by building bridges that allow researchers and industry to meet; Contribute to the implementation of government support programs (UNDP, UNESCO, special organizations, etc.) related to technology promotion under its funds; Cooperation with the various specialized networks around the world dealing with technology transfer and technology promotion in general; Organize for its members and/or the public conferences, study days, seminars, symposia and congresses on current topics related to technology and the promotion of research in general; Work to spread and popularize new technologies by taxing efforts based on their socio-economic benefits. Thus, we recalled the main institutions that have been created in Algeria since the birth of the national research system in 1971, especially with the creation of the Ministry of Higher Education and Scientific Research. 2. Agreements and Treaties Signed by Algeria Table 1: List of International Treaties and Agreements Applicable to Algeria's Affected Territory Date of Algeria's Accession 1 ‚Äď Convention Establishing the World Intellectual Property Organization of 1967, amended in 1979 Promotion of the Protection of Intellectual Property Cleanliness and administrative cooperation between trade unions for intellectual property rights 23.03. Treaty of Paris of 1883, last revised in Stockholm (1967) and amended in Madrid. The Convention of 1891, revised in Stockholm 1967 and amended in 1979. The basic principles and general rules of protection are laid down for the protection of industrial property. 07/07/1972

3254 Treaty of Nice 1957 revised in Stockholm 1967 and adapted to Treaty of Lisbon 1958 revised 1967 Stockholm and amended to Treaty of Madrid 1891 supplemented by Stockholm Act (1967) 7 Nairobi Treaty (1981) 8 - Treaties on cooperation (1970) patents (1970 ) Annex 1 Member States International classification of goods and services for trademark registration Protection of original applications and their international registration at the WIPO International Bureau Combating false or misleading attributions to products Protection of the Olympic symbol against unauthorized commercial use by the International Olympic Committees. Filing an "international" patent application. This sets out the formal requirements that all international applications must meet. 05/07/ /07/ /07/ /08/ /03/ Workshops organized by the person in charge Table 2: Workshops organized by the person in charge (end of 2007). N Project title Field Organization date 01 Image multiplier of an IEM light source 11-10/ Multidirectional quantification of agricultural wind 16 and sand 03 RFID electronics Vitro plant and sanitation Agriculture Equidistant cylinder motor Industry Power amplifier of photovoltaic cell electronics performance 07 Tunnel Pasteur in rain mode Industry Water distribution system Agriculture by injection "IPE SYSTEM" 09 The white box and the remote control network for road and rail ICT source: ANVEDET in April Table 3: List of Anverdet workshops planned for 2009 N Project title Planned in the field date 01 In vitro plant and sanitation Agriculture Wednesday Design and implementation incentive strategy and ICT circuit 2 .half year February 03 Front irrigation slope or other water supply project 1. 14 days

326Appendix 1. Mar 04 Parallel machine with distributed memory ICT 2nd half Mar 05 Antacid Health 1st half 06. Water treatment Water resources 2nd half 07. Marine resource management Water resources 1st half May 08 Automatic processing system explosion results ‚ÄúSTART‚ÄĚ ICT 2nd half 9. May Encryption Software ICT 1 14 Jun 10 Fiber Optic Telecommunications and Digital Techniques ICT 2 14 Jun 11 Docking Ship Management System ICT 1 14 Jul 12 Monitoring and Video Conferencing Unit ICT 2 14 Jul 13 Synthesis of Diisopropyl Ether -Dehydration of isopropanol IEM 1 14 Sept. 14 Automatic sprinkler irrigation controller RE 2 14 Sep 15 Algerian MT Protocol 2002 DHS 1 14 Oct 16 Management system for water distribution by injection "IPE SYSTEM" Agriculture (workshop with the agricultural sector) 2nd half of October Source: ANVREDET in April 2009.

327Annex 2: Examining the main factors that drive SMEs to innovate, using the example of Algerian companies. This research is part of the development of a thesis on economics and management at the University of Tlemcen. It targets a sample of Algerian SMEs. The information collected remains confidential and may under no circumstances be used for purely educational and scientific research purposes. Thank you in advance for your cooperation. 1- General company information 1 Company name 2 Address (place) 3 Legal status Private Public Private and public 4 EURL SARL SNC SPA 5 Activity sector Retail Construction service Industrial production Wholesale Import & Export Craft production 6 Type of business Agrifood Energy Chemical Textile Services Electronics and electrotechnical industry Equipment for municipalities Construction work Mechanical engineering and metallurgy Furniture and decoration 7 Year of establishment 8 Share capital 9 Tel.: Fax: E-mail: Website: 2- Innovation in the company Please comment on the following information: 1: disagree 2: more or less agree 3: neutral 4: agree 5: strongly agree Innovation has a very important place in your company. The following activities have had a positive impact on your business since its inception. 2 - Investments in equipment that were very important to your business 3 - Investments in R&D that were very important to you 4 - Very important changes in your marketing strategy 5 - Replacing your old suppliers with new suppliers 6 - Hiring employees who had qualifications that are did not 7 - Use of production technologies that your company has not used before. The results achieved have helped your business. - Technical performance - Better product quality - Conquer new markets - Differentiation from competitors - Better positioning - An important image - Survival

328Appendix Cost reduction 3 ‚Äď Entrepreneur 1: disagree 2: somewhat agree 3: neutral 4: agree 5: strongly agree In your opinion, the entrepreneur should have the following characteristics: - authoritarian - cooperative - innovative - opportunistic - risky - motivated - Competent Do you think that these measures have a great impact on creating a favorable environment for the emergence of new ideas? - Have regular meetings with senior management - Require employees to participate in training programs - Make changes to the company's organization - Encourage job rotation Can you indicate whether: - your company focuses its research and development (R&D) activities on technical development and not on factual development research - you have received advice from one of your relatives, which is invaluable to you today - you have a university degree in the field of your business - you believe that you have better communication and interaction skills with others than ordinary people , with whom you do business with - When your company has a problem, always look for constructive solutions rather than who is to blame or blame one of your employees. Human skills 1: disagree 2: somewhat agree 3: neutral 4: agree 5: strongly agree The decision to improve the quality of products, techniques and production or organizational methods usually comes from: - Only company managers - Various operational managers - From the entire work collective When hiring, you must target: - More Algerian than foreign workers - Who live not far from the workplace - Require some work experience - Require diplomas Your employees benefit from: - Innovation bonus system

329Appendix Creativity rewards - Use of job rotation and versatility - Autonomous or semi-autonomous innovation work groups - Structured vocational training - On-the-job training - Participation in supported training - Exchange of ideas between employees The company encourages new employees to: - Purchase of new machines and equipment - Expansion of the company - Innovative projects 5 - Financial capacity 1 Which financial resources do you normally mobilize to finance your activities? Equity Yes % No Loan Yes % No Grant Yes % No Venture capital Yes % No Other 2 Do you have difficulty getting financing? Yes No If yes, what kind of problems? 3 Reserve a percentage of revenue for innovation (product, process, organization and distribution) Yes No 4 If yes, how many % do you think - Financing with very little capacity is an obstacle to innovation - the greater the financial strength of companies, the greater the tendency to innovation. - Investments in research and development make an important contribution to many forms of innovation. - Innovative companies no longer necessarily have to spend large sums on research and development to successfully bring new products, processes or services to market. - The larger the company, the greater the financial strength - Innovations can be implemented without significant financial resources. Partnership 1 Is there a partnership relationship? Yes No Do you think that cooperation with - Other companies in the same field facilitates access to innovation - Universities and colleges are considered key partners for innovation

330Appendix Suppliers help the company to innovate - The customer is the original source of innovation - Calls to other domestic or foreign companies in the same field of activity help the company to innovate - Calling for support of government structures helps the company to innovate - Engaging consultants Laboratories are the best relations to innovation (trust). The choice of partner is made on the basis of - the degree of the company's awareness - this company's membership of an R&D network - this company's geographical proximity. The goal of this partnership is connected with - need for complementarity - need for exchange - access to technology - cost and risk sharing - need for stability 7- Competitive pressure Competitive pressure - Belonging to a competitive pole drives the company to its products - Competitive pressure forces the company to bring new products on the market. - A large market (local, regional, national or international) represents an element receptive to innovation. 8. Relationship between research and development and other variables. Do you confirm that: - Research and development is one of the cornerstones of innovation? - The entrepreneur who focuses on R&D activities is more in favor of innovation. - The human resources dedicated to R&D activities facilitate the company's innovation. - Investments in R&D activities are an important input for many types of innovation. - Participation in R&D collaborations with other companies is important for the company's innovation. Obstacles to innovation Does the following statement apply to you: 1: not important 2: quite important 3: neutral 4: important 5. very important - monitoring, information management - information on structures and tools for innovation - fundraising - training in innovative project management - training in technologies or know-how

331Appendix Finding partners - Information/advice on intellectual property protection - Use of laboratories and equipment - Management of organizational and social change - Marketing of new products/services 11 Are you aware that there are structures responsible for development and promotion of SMEs, such as business incubators, moderation centres. Yes No 12 How do you currently assess the state's role in supporting innovation activities? Very satisfying. Satisfying. Neutral. unsatisfactory. Insufficient Which factors hindered your innovation activities (by level of importance): 1: None 2: Low 3: Medium 4: High 5: Very high Knowledge-related factors: - Lack of qualified personnel - Lack of information about technology - Lack of information about markets - Difficulty with partners to innovation. Market factors - Market is dominated by established companies - Uncertainty about the demand for innovative goods or services - Customers have no interest in human resources - Difficulties in attracting qualified staff - Lack of qualifications of internal staff - Difficulties in recruiting staff within the required time leads to other factors - Possible insufficient cooperation with other companies - Possible insufficient cooperation with the university and research centers - Inability to evaluate new products or devices (state of the art technique) 10- Additional information Please enter your age between - Enter Enter your level of education: None High School High School University Vocational Education Are you: - Owner, CEO, Founder - Heir, CEO - Other Please specify: Your company's workforce is between: I apologize for taking up so much of my time. Thanks for your cooperation

332Appendix 3. Summary table (Number of points given 10 for best, minimum 1) Author R.H ENTR TIC R.F Height S.A Age R&D Cul. PC Strategic structure Par. Exp. SI e Jong & Brouwer 1999 Le Bars Anne 2001 Romijn H. and Albaladejo M 2002 Julien P.A & C. Carrier 2002 Galende J. and De la Fuenta J.M 2003 Amara N. and Landry R Bouacida Y and Haudeville Bernard 2006 Becheikh Al 2006 & Freel MS and Harrison R.T. 2006 St. Pierre & Trepanier 2007 Soparnot R. et al

333Appendix 3 Vega Jurado et al. Girard P Baowendsomde Eliane Olga Pascal Morand and Manceau Delphine 2009 Frenz, M. and Letto-Gillies, G 2009 Bouzid Ines Tlili Adel and Chrir Ali 2011 Jean Christophe Saunière et al Catherine Ducaux 2013 Léon Claude Bolton Claude Boldri 3 N Claude Bol. Safoulanitou et al. Aissat Leghima en 2014 TOTAL R.N: business relations were integrated with the contractor R.H: human resources, R.F: financial resources S.A: division Cul. : Company culture P.C: Competitive pressure By: Exp Partnership. : IS export: Information system 10 10

334Appendix 3 According to the 23 studies presented in the previous table, we can summarize the following results: Collaboration (Partnership) Human skills Entrepreneurs Financial strength Competitive pressure R&D These variables are used to analyze the determinants likely to influence the innovation capacity of the Algerian SMEs 'is .

335Appendix 4 1- Variable INNOVATION Factor analysis Descriptive statistics Average standard deviation and analysis a Missing N Inov1 1.3136, Inov2 2.2458 1, Inov3 2.3051 1, Inov4 1.8220 1, Inov5 2.2797 8 Inov5 2.2797 8 Inov27 8 .6949 Inov6 Inov 7 1.26429 Inov8 Inov9 118 Inov10 Inov11 Inov12 0 Inov13 Inov14 Inov15 Inov1 1,000 -.406,025 Inov15,059,177 3,3644,238 -.187 1,23804,013 -, , 520, -1, 52, -2, 52, -1, 52, -1, 52, -1, 52 , -1. ov2 - .406 1,000,262 a. For -,050 each -,178 variable,,143, the missing,334,085 values,157 -,002 are replaced by -,203 the,067,070,144,353 Inov3,025,262 1,000 mean values,305 of the variables. -016124282521036169335348540407161 78 -.016.440 1.000.199 -.045.271.318.554.427.477.032.144 -.274 -.284 .200.684 -.284 -.284 -.28 4 -. 45 - .110 1.000 - .049 - .028.123 - .328 - .013 - .035 - .261.036 Inov8.013.085.521.225.271.429 - .049 .080 Inov9 -.17 7,632,08,407 - .1520,807. 1,000,444,172,412,204,095,059 42 Inov11 ,525 -,203,335,333,427,209 -,328,318,172,236 1,000,497,354,573 -,034 Indv. 363 .486 .011 Inov13 -.025.070.540.211.032 -.058 -, 035,378,204,343,354,363 1,000,386,234 Inov14 .135,74,145,41,035,741,035,378,20 4,343,354,363 09 5.1 82,573,486,386 1,000,454

336Appendix 4 Inov15 -.407,353,161 -.027 -.284,067,036,080,059 -.242 -.034,011,234,454 1,000 KMO index and Bartlett test precision measurement of Kaiser Meyer-Olkin1pling .59. Estimated Chi-Square 863.475 Bartlett's Sphericity Test Dof 105 Bartlett's Significance.000 Quality of Initial Representation Inov1 1000 Inov2 1000 Inov3 1000 1000 Inov5 1000 Inov6 1000 Inov 0 Inov 0 Inov. 0 Inov10 1,000 Inov11 1,000 Inov12 1,000 Inov13 1,000 Inov14 1,000 Inov15 1,000 Total Variance Explained Component Initial Eigenvalues ‚Äč‚ÄčSum of Squares of Factors Held for Rotation Total % Variance Cumulative % Total % Variance Cumulative % 1 4,271 28,470 28,470 2.977 19.846 19.0.390 15.9501 3 2.501 4.501 4.501 7.0. 7 9 7 11,979 56,380 2,092 13,950 50,256 8,376 64,756 1,653 11,017 61,197 7,979 72,735 1,638 10,921 72,735 6,886 5,905 78. 640 7,742 4,949 93.5 8, 8, 8, 9 83.5 504 3.3 62 90,690 10,430 2,865 93,555 11,305 2,031 95,585 12,227 1,515 97,100

337Appendix 4 13,193 1,286 98,386 14,137,916 99,301 15,105,000 Matrix of components after rotation of one component Inov10,823,164 -,159 -,139,001 Inov5,7,108 Inov5,7,101 -7,913. 37 - , 0 33,342,123- .155 Inov12,724,369 -.068,105. 333 Inov4,649,282 - .028 - .034,137 Inov3,047,858,048 - .270,195 Inov13,211,794,097,104 - .211 Inov14,185,576,19. Inov2 ,031 -,008,093,913 Inov 8,183,2600 component matrix 5,102,8600 96,583 - ,103,201, ,212,449,837 - ,226,0 51 3,621 - . 331,179 - .635 - , .273,178 - .383 - .686,526 5,101 - .563,333,184,726

338Appendix 4 Component Coordinate Coefficient Matrix Component Inov1 --.091.086 --.398.008.118 INOV2.017 --.028.319 --.163.218 INOV3 -.119.421 -.083 -.083 - 78 - , 1 59 -, 059.015.072 INOV6 -, 030 -, 187.042 -, 001.654 INOV7.022.115 -, 028 -, 561.026 INOV8 -, 039.133 -, 0706 -, 0706 -, 0706 - - 0706. 144.252, 175, 1752 -,,047 -,124 -,095 Inov11,007,174 -,157,238 -,012 Inov12,210,030,007,007,108 Inov13 -,001,394 -,006,0029 Inov,110,030,007,007,108 In ov13 -.001.394 -.006.0029 -.4306 Inov ,146,106 6 I ov1 5 -, 069,065,378,244,028 Extraction method: Principal component analysis . Rotation method: Varimax with Kaiser normalization. component ratings.

339Appendix 4 Summary of observation processing N % valid .0 Excluded observations a 0.0 Total .0 List-wise deletion based on all variables in the procedure. Confidence Statistics Cronbach's Alpha Cronbach's Alpha Based on Normalized Items Number of Items,804, Innov 2: Descriptive Statistics Mean Standard Deviation a n Analysis a Missing N Inov17 1.9746 1, Inov32 2.8983 1, Inov346, 0646, 1, 846, 1, 646, 1, 646, 1, 646, 1, 646, 1, 646 37 1.8729 1 Inov38 1.9492 1 Inov22 2.6102 1 Inov29 2.5339 1 Inov30 2.1949 1 Inov23 2.3136 1 Inov16 2.0678 1 In ov24 2.4746 1.79 6. Inov1 value 6.1. has been replaced by the mean value of the variable

340Bilag 4 Granulation Matrix Inov1 7 Inov3 2 Inov34 Inov36 Inov37 Inov38 Inov22 Inov29 Inov30 Inov23 Inov16 Inov24 Inov27 Inov19 Inov18 Inov17 1947.195.1. .68 Inov32.225 -,037.221 -, -,200.309 Inov34.366.146 .271 -, 0 29,503,306,420,408,338 - .102 Inov36,497,200 .046 39,503,306,420,408,338 - .102 Inov36,497,262,040 39,146 . .147.049.326.068 - .053 .387 Inv37.300.215.212.439 223, 193.061 -.078 Inov38 ,432 -,037.118.511.124 84.158.154 58.269 Iov. 9,010 1,000,214 .163,163,108 -,057,163 -. 073 Inov30 .165.166 -.029.394.046,103.290.214 1.000.175, 241.096.039 -.022.249 Inov23.591.124.503.147, 272. 184.184.016. 241.538.127 - .126 Inov16 .175.024.306.049.307. - .148 Inov24.352.201.35.688.688.24.688. 08,096,241,294 1 05703 9538051106 .022,127,242,380,112 1,000 -. 2 69 Inov18.191.309 -.102.387 -.078,154.269 -, 073.249 -.126 -. 1 48.349 -.038 -.269 1.000 KMO Index og Bartlett Test Kaiser-Meyer-Olkin Sampling Præcisionsmåling ..634 Approximate Chi-Square 772.230 Bartlett Sfæricitetstest ddl 105 Bartlett .000

341Appendix 4 Screen quality Initial Inov17 1,000 Inov32 1,000 Inov34 1,000 Inov36 1,000 Inov37 1,000 Inov38 1,000 Inov22 1,000 Inov29 1,000 Inov30 Inov 1,000 Inov 1,000 Inov 1,000 Inov 1, 000 Inov 2 4 1,000 Inov27 1,000 Inov19 1,000 Inov18 1,000 total variance explained component initial eigenvalues ‚Äč‚Äčsum of squares of factors responsible for total variance % cumulative % retained. Total variance % cumulative % 1 4,274 28,493 28,493 2,584 17,227 17,073 13,821 42,313 2,108 14,051 31,628 10,853 52,406 53,4066 53,4066 53,4066 049 6,992 76,362 1,284 8,559 76,362 7,769 5,125 81,487 8,61 3 4,087 85,575 9,583 3,884 Extraction method: Principal component analysis. Matrix of components after rotation

342Appendix 4 Component Inov27873 -.023 -.046 -.052.018 -.055 Inov23.822.145 -. Inov22.765.135.394.248 -.110.454 -.110.454 In.203.454 -.203.454 0 0 5Inov38.116.798.092.131-. 059 - .083 Inov36,066,724,391 - . ,0 52,470,063 Inov19,068,117 -,252,784 -,116 -,028 Inov24,168,214,530,721,107,001 Inov37, 134,212 -.019,054,179,054. 11-.070.869 Inov16.053-.113 -.147.501.356.576 Extraction method: Principal component analysis. Rotation method: Varimax with Kaiser normalization. Ugly. The rotation converged in 8 iterations. Component Transformation Matrix Component .3 39.017 6.005 - .199 - .021.118 - .498.835 Extraction method: principal component analysis. Rotation method: Varimax with Kaiser normalization.

343Appendix 4 Coefficient matrix of component coordinates Component Inov17055169116152030 -.136 Inov32 -.026 -.215340 -.035355 -.016 Inov34159 -.081 -.0611994086 -.96 -.96 -. .172,0 31 Inov37 - 0,030, 045 -.072 - ,083,664 -,113 Inov38 -,002,453 -,034 -,020 -,125 -,176 Inov22,303 -,043,149,020 -,218,095 Inov30,010,70, 2,70,190,2,70,190,2,218,095 Inov23 ,361, 00 9 -,116 - ,111,051,038 Inov16 -,105 -,208 -,095,272,198,473 Inov24 -,111 -,034,286,420 -,019 -, 019 -.7345 -.019 -.7345 -.7345 -.734 .050 -. 074 Inov19 -.091.016 -.109.467 -.156 -.032 Inov18 -.068.027.430 -.020 -.182.032 Summary processing observation N % valid .0 Observations excluded a 0.0 Total .0 a. Listwise deletions the procedure.

344Appendix 4 Reliability statistics Cronbach's Alpha Cronbach's Alpha Based on normalized items Number of items,799, Entrepreneur variable: Descriptive statistics Mean standard deviation an Analysis a N Missing Entr1 1.9407 1, Entr14 2.0593 the 41, for each variable, the missing value 41. is replaced by the mean of the variable. Correlation matrix Input1 Input14 Input4 Input13 Input6 Input15 Input5 Input8 Input12 Input11 Input1 1,000,074,090,028,322 - .068,282,396,120,161 Input14,00074,31,41,41,31,41,31,41,41,31,31,32,41,4 1,31,31, 4,31,41,41,41,41,41,41,41,41,41,41,41,41,41,41,42,400 1.1 66,255,303 In t4,090,382 1,000 -,137,401,361,131 - .071,148,396 Int13,028 -.120 -.137 1,000 -. 060 -, 473,031,027 -.481,084 Correlation In6,322,394,401 -,060 1,000,025,155,453,197,499 In15 -.068,13 4,361 -, 504,04,04,04,04,04,04,04 4,04,04,04,04 ,04,04,04,04,04,04,04,04,04,04,04,04,000,000 ,035 In 5, 282,251,131,031,155 -.007 1,000,270,080,138 Int8. 396,166-.071,027,453-.048,270 1,000-.04 7,317 Int12,120,255,148 - , 481,197,318,080 -.047 1,000 -.1.056 I.1.056 I.1.056 .0 35,138,317 - .056 1,000

345Appendix 4 KMO Index and Bartlett Test Kaiser-Meyer-Olkin Sampling Precision Measurement.,630 Approximate Chi-Square 276,495 Bartlett Sphericity Test Dof 45 Bartlett Significance.000 Representation Quality Initial Entr1 1,000 Entr1, Entr1, Entr1, 000 1,000 000 Input6 1,000 input1 5 1,000 input5 1,000 Input8 1,000 Input12 1,000 Input11 1,000. Total Variance Explained Component Initial Eigenvalues ‚Äč‚ÄčSum of Squares of Factors Held to Rotation Total % Variance Cumulative % Total % Variance Cumulative % 1 2.736 27.365 27.365 2.121 21.212 21.0.966 19.647 19.647 9.046 19.647 9. 24 4 1 2.4 41 59,469 1,879 18,787 59,469 4,913 9,126 68,595 5,784 7,840 76,435 6,720 7,205 83,640 7,512 5,119 88,759 8,431 4,315 93,074 9,280 40,606 40,286 40 action method: Principal component analysis.

346Appendix 4 Transformation matrix of components component ,767,326,553 2,011 -,868, ,642,375,669 matrix of components after rotation of a component Entr4,800,230 -,129 Entr11,761 -,213,46t Entr11,761 -,213,7t Entr11,761 -, 213.72t Entr906t Entr4,213.7t Entr4,213.72t Entr. 16,225.1 84 inputs 13,015 - . 831,006 Input12, 034,783,179 In15,249,689 -,195 In8,147 -,118,769 In1,029,034,762 In5,122,055,562

347Appendix 4 Reliability Matrix of Component Coordinate Coefficients Component Input1 -.131,052,451 Input14,278,063,005 Input4,437,031 -.216 Input13,096 -.446 -.039 Input6,2260,6091 -. 5 -.0 45,044. 31 5 Entry 8 - .051 -.042,426 Entr12 -.098,423,138 Entr11,401 -.186 -.032 Observation Processing Summary N % valid .0 Observations excluded a 0.0 Total .0 a. Listed deletion based on all variables in the procedure. Cronbach's alpha Reliability statistics Cronbach's alpha based on normalized items Number of items,522, Variable Human skills Descriptive statistics Mean standard deviation and analysis a Missing N CH3 2.6271 1, CH2 2.4831 1, CH7 2.4153 1, CH11 2.45, CH316, A. For each variable, replace the missing values ‚Äč‚Äčwith the mean of the variable.

348Appendix 4 Correlation matrix CH3 CH2 CH7 CH11 CH17 CH3 1,000,162,250,227,468 CH2,162 1,000,104,323 -.009 Correlation CH7,250,104 1,000,009,009,009,1206,9,129,07 CH11,150,0 09,129,07 5 CH1 7. 468 -.009,156,095 1,000 SME index and Bartlett- test Precision measures of the Kaiser test - Meyer -.561 Olkin. Approximate Chi-Square 58.017 Bartlett Test of Sphericity DOF 10 Bartlett Significance.000 Total Variance Explained Quality of Display Initial CH3 1.000 CH2 1.000 CH7 1.000 CH11 1.000 CH17 1.000. Component Initial Eigenvalues ‚Äč‚ÄčSum of Squares of Factors Held to Rotation Total % of Variance Cumulative % Total % of Variance Cumulative % 1 1,759 35,186 35,186 1,597 31,931 31,199 23,987 51,367 59,172 3,186 5 18. 3 08 77,481 4 .634 12,676 90,157 5,492 9 , , 000 extraction method: principal component analysis.

349Appendix 4 Matrix of components after rotation a Component 1 2 CH17,809 -.055 CH3,800,245 CH7,540,021 CH2,008,818 CH11,107,793 Transformation matrix of components Component 1 2 1,842, .4 principal components method:8 extraction method. Rotation method: Varimax with Kaiser normalization. Coefficient matrix of component coordinates Component 1 2 CH3,487,089 CH2 -.094,618 CH7,346 -.049 CH11 -.026,587 CH17,529 -.139 Extraction method: Principal component analysis. Rotation method: Varimax with Kaiser normalization. component ratings. Cronbach's Alpha Confidence Statistics, Number of Items, 505 5 Observation Processing Summary N % Valid .0 Excluded Observations a 0.0 Total .0 a Listed deletion based on all variables in the procedure.

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